Loading...

Webinar: Solar tariff of INR 2.00 arrived sooner than expected


01 March 2021 | BRIDGE TO INDIA

Webinar: Solar tariff of INR 2.00 arrived sooner than expected

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

India Solar Map | December 2023

India Solar Map | December 2023

India Solar Map 2023 is an info-graphic report covering growth of utility scale solar sector – national and state-wise commissioned and pipeline capacity, leading market players and portfolio details of top 16 project developers. Capacity addition in 2023 fell 51% YOY to 5,924 MW taking total utility scale solar capacity to 59,840 MW. Total project pipeline stands at a record 74,161 MW.

India Corporate Renewable Brief | Q4 2023

India Corporate Renewable Brief | Q4 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

India PV Module Intelligence Brief | Q4 2023

India PV Module Intelligence Brief | Q4 2023

This report captures quarterly trends in module demand and supply, import and domestic production volumes, supplier market shares, break-up by technology and rating, global market scenario, pricing trends across the value chain, key policy developments and market outlook.

India Solar Compass | Q4 2023

India Solar Compass | Q4 2023

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and policy announcements, equipment prices, financial deals and other market developments. It also provides market outlook for the next two quarters.

Inter-state OA — opportunities and challenges

Inter-state OA — opportunities and challenges

Inter-state transmission system (ISTS) open access (OA) renewable market is growing strongly on the back of multiple drivers including a waiver from ISTS charges together with decarbonisation pressure on corporates and streamlined transmission connectivity approval process. However, the ISTS route savings are viable only for projects commissioned by June 2026 (at least 75% ISTS charge waiver).

India Corporate Renewable Brief | Q3 2023

India Corporate Renewable Brief | Q3 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

To top