NTPC, PTC India allowed dollar-linked tariffs for new solar projects

Debabrata Das Richa Mishra New Delhi | Updated on January 24, 2018


Move will bring solar power costs to below ₹4.5 a unit from ₹6-7 now, say industry experts

The Centre has allowed state-owned NTPC and PTC India to charge dollar-linked tariffs for their new solar projects.

The Minister of New and Renewable Energy Piyush Goyal had taken a decision on this recently and “we have asked NTPC and PTC to go for dollar-linked tariffs for 1,000 MW each on a pilot basis. If successful they can go up to 10,000 MW each with the same tariff mechanism,” Upendra Traipathy, Secretary, Ministry of New & Renewable Energy (MNRE), told BusinessLine.

The idea of developers getting dollar-linked tariffs from distribution utilities has been mooted to get grid parity for solar power. Distribution utilities are expected to quote tariffs in dollar-linked rates for 25-year contracts. Currently, solar power is sold at around ₹6-7 a unit, coal-based power is sold at ₹3-4 a unit and gas at around ₹4.7 a unit.

Dollar-linked tariffs can bring down solar power costs to below ₹4.5 a unit, according to industry officials.

However, the model could require a ‘hedging cost’ to cover for the depreciation of the rupee versus the dollar. Modalities of the same are yet to be firmed up.

The Government has reset its solar mission target to have 100,000 MW by 2022. The country is expected to end 2015-16 with 6,000 MW of solar power capacity. The real thrust in capacity addition is expected to come from the next fiscal, Tripathy said, adding that “the Ministry’s strategy to achieve the solar mission targets is to tender more than the next year’s target in the current year.” “Next year our target is 12,000 MW. To achieve this, it takes 13 months of planning. We will tender 15,000 MW to meet this target,” he added.

Out of the 15,000 MW that the MNRE plans to tender, Rajasthan has already tendered 450 MW while Andhra Pradesh has tendered 1,000 MW.

“In addition, 2,000 MW will be done by the Renewable Energy Corporation of India and 5,000 MW through viability gap funding is also on the anvil for tendering. We will again go to the Cabinet for this soon,” said Tripathy.

Out of the entire 100,000 MW target, 40,000 MW is expected to come through rooftop solar installations. However, this target could be reworked.

“We had set this target thinking that the pressure on land will come down and because every country has 30-40 per cent rooftop solar. While India also can do it, there can be a delay in this. We will reassess the rooftop part of the target because we are better on land-based projects,” Tripathy said.

Published on July 05, 2015

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