No more Free Fall of Solar Tariffs in 2018

As per the Ministry of New and Renewable Energy (MNRE) data, Solar power tariff fall seems to have bottomed out and may not drop beyond an all-time low of Rs 2.44 per unit in absence of well structured bids and rising solar panel prices on demand pressure.

The solar tariff rose to Rs 3.47 per unit for 1,500 MW capacities in Tamil Nadu under a state scheme in July and then dropped again to Rs 2.66 per unit in an auction for 500 MW capacities in Gujarat. In an auction of state-run power giant NTPC for 250 MW capacity, the tariff was Rs 3.14 per unit. But it dropped again with viability gap funding to Rs 2.47 per unit and Rs 2.48 per unit for 500 MW Bhadla-III and 250 MW Bhadla-IV auctions in December 2017.

During 2017, solar power tariff hovered around Rs 2.4 per unit level only in auctions for capacities, where viability gap funding component was there. Viability Gap Funding means a grant to support projects that are economically justified but not financially viable. Therefore, the reasonable solar tariff on basis of data available with the ministry is around Rs 3 per unit. It fell sharply only when viability gap funding component was there.

As per Pricewaterhouse Coopers, ” High global demand has pushed up prices of solar modules. Also, the recent bids are not that well structured as previous ones and bidders are factoring that risk in so no more drops.”