Webinar: Solar tariff of INR 2.00 arrived sooner than expected

01 March 2021 |

BRIDGE TO INDIA’s latest webinar attempted to make sense of recent record low solar tariffs observed in SECI’s Rajasthan 1,070 MW and GUVNL’s 500 MW tenders. Panellists included Mr. Sanjay Varghese (President & Head – Solar, ReNew), Mr. Sanjay Kumar (Head BD & Proposals, Larsen & Toubro), Mr. Andrew Gilhooly (Head – Trina Pro, Trina solar – APAC), Mr. Lim Cheong Boon (Head – Product & Marketing, Trina solar – APAC), Mr. Honey Raza (Head – Sales, Ginlong Solis) and Ms. Zia Nariman (Senior Investment Officer, International Finance Corporation).

The discussion was kicked off by ReNew’s Sanjay Varghese, who attributed unprecedented low bids to a number of factors including market slowdown in the months leading up to the two auctions, influx of major capital in the market, falling cost of capital, aggressive bids by PSUs as well as optimistic assumptions – related to use of new technologies and equipment prices – made by some developers. He argued that offtake certainty and availability of transmission infrastructure also increased appetite in the two tenders.

Trina Solar’s Lim Cheong Boon noted that bifacial modules provide up to 25% additional power output with trackers and an overall 5-10% reduction in LCOE in comparison with monofacial modules. Boon also highlighted other benefits of larger and more efficient modules leading to faster installation times and savings in BOS costs. Meanwhile, Andrew Gilhooly acknowledged that trackers have not been historically popular in India but “things have started to pivot rapidly now.” As per him, intelligent tracker algorithms help maximise power output yield particularly for bifacial modules across different terrain and soil types. Solis’ Honey Raza also pointed towards multiple changes in inverter technology with rapid innovations and optimisation for new module sizes and bifacial products. According to Raza, these innovations have led to improved reliability, reduced equipment failure, operational and logistical issues, labour costs etc. String inverters already occupy about 60% market share, which seems set to rise in the near future.

Notwithstanding various technology advancements, most panellists also emphasised high risk arising from soaring equipment prices, steel and aluminium prices, freight rates etc. L&T’s Sanjay Kumar said that in the past, faced with unviable projects, developers have tended to put pressure on suppliers and contractors, and compromised on project quality in the process. But there was also a sense that with the industry gaining more experience and increasing presence of credible players, there is an increased awareness in the sector for superior operational performance and higher longevity of assets.  

IFC’s Zia Nariman commented that financing terms have been softening over the past few years. Interest rates have fallen to 8.5-9.0% for greenfield projects in comparison to over 11.0% just over two years earlier. Refinancing in operational phase can further bring down cost by another 50 bp or more. IFC is currently looking at sanctioning funds for projects with tariffs ranging between INR 2.37 and 2.43/ kWh. She expressed confidence that as IFC works with the most experienced and credible developers, their clients would able to absorb any project specific risks as part of their overall portfolios.

Overall, the panel maintained that bids in these tenders were unexpectedly aggressive and below optimal levels by about 10-12%. Given the rapid fall in costs, falling tariffs are entirely natural but the pace of decline is expected to fall in future. For more insights on the topic, watch the full webinar recording here.


Recent reports

A business case for renewable energy certificates for Indian companies to meet RE 100 targets

C&I consumers account for 53% of power consumption but only 6% of this requirement is met from direct procurement of renewable power. In face of m...


A business case for rationalisation of Green Tariffs in India

Only about 6% of total C&I demand is met from direct procurement of renewable power. In face of multiple challenges faced by established routes li...


India Corporate Renewable Brief | Q3 2022   

Our latest edition of quarterly report provides a detailed regular update on key trends and developments in the C&I renewable market....

Buy Report Download Executive Summary

India PV Module Intelligence Brief | Q3 2022   

This report captures quarterly trends in module demand and supply, import and domestic production volumes, supplier market shares, break-up by technol...

Buy Report

India Solar Compass | Q3 2022   

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and po...

Buy Report Download Executive Summary
Award winnig research
We use cookies to offer you an optimal user experience and collect information on website usage.