Solar energy tariffs in India, that have fallen below Rs.5 per unit since November, are anticipated to fall further because the industry doubles the volume of power generation each year and thus, the price of generating solar power is constantly on the decline. Industry experts say that solar power price may fall up to Rs 3.5 per unit within 3 years due to better utilization of technology, greater production, and increased competition .
India has targeted 100 Gigawatts (GW) of solar and 60GW of wind energy production capacity by 2022. It presently has about 8GW of solar capacity contributing to 27GW of wind power capacity. India has set up a current target of 20 Giga watts for this year. And if achieve its goal then would become the fourth country in the list of top solar power generators in the world. Well, reduction in the solar power price may be proved as a shot in the arm of Modi government, that has pressed alternative energy on the top of their energy security agenda and it has been planning to supply eco-friendly power at under Rs.4.50 one.
There isn’t any question about whether or not they (tariffs) goes lower or otherwise. Typically there has been a 3-4% rise in efficiency and 3-4% decrease in the cost of setting up a solar power plant. Therefore it is expected that the solar tariffs may go down by 5-8% every year.
Prices of solar panels or modules have recently fallen dramatically and come down by 10% within the first half of 2016 , resulting in greater margins and reviving projects that have been called unviable earlier. Hence the reduced cost of setting up a solar plant is also proving to be a one of the major reason for the reduction of solar power tariff.
“The price of production is constantly going down to the lower side. The task is obviously as simple as just how much and whether this becomes unsustainable in specific closing dates,
Bridge to India sees tariffs falling by a minimum of 5% yearly and calls a sub-Rs.4 per unit tariff a practical number. Other subsectors within power generation don’t expect the loss of prices. So from grid-parity or competitive aspect, solar is easily the most attractive energy source for lengthy-term.
As per the reports published in the news magazine Mint, Bigger industrial facilities minimizing the price of manufacturing may ultimately result in a decrease in tariffs within the next couple of years, stated Pashupathy Gopalan, president, Asia Off-shore, SunEdison Corporation., that has over 1GW of operational and under-construction solar projects in India.
To be certain, many have known as the falling tariffs “unviable” and “suicidal”, stating cases of companies not able to locate financial closure for his or her projects Power producers argue they have had the ability to bid strongly at government-provided solar parks because of ready-to-use infrastructure for example land and transmission facilities. Global firms for example Fortum, SoftBank and SunEdison are also bidding aggressively to hit a great start and share a pie in the Indian Market of solar power generation.
In India, which holds reverse auctions for tendering solar projects, the function of the seller and buyer is corrected along with a business bid is won by bidding minimum price and there is no limit however in every other country, putting a bid is really a double-edged sword, because there is a condition that nobody can bid below a particular cost or IRR (internal rate of return). But India doesn’t have any such condition. While lower tariffs are good for consumers and also for the healthy business atmosphere, but this would enhance the aggressive competition which would result into the reduced profit of margin. So we shall not really appreciate the reduction in solar power tariffs as this would definitely discourage the entrepreneur to establish a solar power plant in India. Which would hamper the production targets of the Indian government?