Congratulations to the winners and am sure that comparatively they possess all right rationale and better knowhow / cost economics sense on desired returns to equity investors. While I believe every tariff is viable when you invest in a project. But the term ‘viability’ in Solar arena has assumed a new definition recently. It is time come to a consensus what should be the viable IRR for Solar projects in India?
The current solar bids are projected as a new ‘Trend’ in the solar industry. However, there is Difference between “TREND” & “TRENDY” in Solar : A TREND is established overtime & tends to lead to lasting change. TRENDY is an attention catching phase – similar to what India witnessed during the latest lowest solar bids !! Current low(below cost) pricing is unfortunately a margin crushing long term trend in the solar PV industry. Instead of grid-parity satisfaction , there is much skepticism about financial sustainability of Rewa Rs 2.97/unit solar bids !! Only time will tell, whether it’s just another another poster boy headlines like India witnessed a couple of years back or not !!
Unintended consequences of low Rewa solar bids :
(1) States postponing almost-ready bids
(2) States backing down from PPAs at higher rates
(3) At the same time Wind power producers feeling a little orphaned for reasons : continuously falling solar tariffs & high attention to solar vis a vis wind
And please make no mistake people the current solar project prices are below costs. If this continues quality will suffer & there will be a significant consolidation. There are lots of false information making waves across solar arena. And if you only get your news from PR driven media, dedicated news feeds & a pay for play media you risk being misinformed – which is the current case of Indian solar industry. What is the logical justification of the developers past project costs based on IRRs viz a vis new pricing based on tariffs. Have they embraced the changing realities?
Anyways this is seriously going to affect solar projects undertaken by SMEs and MSMEs, which are supposed to be backbone. Let us wait & watch for this blockbuster thriller solar bids to perform at the box office 😀
What do you guys think 🤔 !? do post your views & opinion on the same….
And in case you are thinking of going green and powering your premises via solar or are thinking of setting up solar power plants across India, as a solar consultant in India we can always help you 🙂
Till we meet next time …
Solar Project Consultant – India
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