Solar energy tariffs are showing no sign of firming up. The downtrend is continuing — as seen in two recent events —proving pundits wrong, and also stoking apprehensions of viability and quality of the projects.

Today, Chennai-based jewellers, GRT, emerged the lowest bidder in a Gujarat government tender that sought to allot 500 MW. GRT quoted a tariff of ₹2.65 a kWhr for 90 MW. Though this is slightly higher than the ₹2.44 a kWhr seen in the famous ‘Bhadla Solar Park’ tender in Rajasthan, floated in May, analysts say it works out to be the same after making adjustments for the higher solar irradiation in Rajasthan compared with Gujarat, and the impact of GST. The rising prices of solar modules, almost all of which are imported from China, and the appreciation of the rupee, does not seem to have mattered much.

“It is a gamble which people are willing to take,” observes Sunil Jain, Executive Director & CEO of Hero Future Energies, a renewable energy company.

The second event is the recent announcement of the winners in a tender for putting up solar plants on the roofs of government-owned buildings. Rooftop plants, and the power they produce, are typically more expensive, given the small size of the plants and the need to customise them to the roofs.

However, the winning tariffs for projects in most States have been under ₹4 a kWhr, which is quite low even after factoring in a subsidy of ₹1.5 crore a MW (₹3.6 crore a MW for ‘special States’ of the North East and the Hill States.) Experts from the successful companies say that the subsidy would account for around ₹1 per kWhr. Rooftop tariffs are generally in the upwards of ₹6.

NYSE-listed Azure Power bagged the highest capacity of 50 MW, out of the 500 MW tendered. Other winners include Renew Solar (34 MW), Warburg Pincus-backed CleanMax Solar (19.5 MW) and Mytrah Energy (20 MW). For 'general category' States the tariffs are: Andhra Pradesh and Gujarat ₹3.94, Karnataka ₹3.83, Maharashtra ₹3.62, Uttar Pradesh ₹3.91, Haryana and Punjab ₹3.32 and Tamil Nadu ₹4.17.

Notably, unlike in the case of larger projects such as the Gujarat’s, the developers have to sign 25-year power purchase agreements with the individual roof owners. The is no payment guarantee other than the comfort that the roof owners are government-owned entities.

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