Sunny side up

When renewable power company Photon Energy took up its first solar photovoltaic project in India in 2010-11, the cost of implementing a one MW solar park was around ₹18-20 crore. It is now down to one-third at about ₹6 crore.

The cost of power supply from a solar plant has also dropped substantively. The first set of solar power plants around the same time delivered the energy at about ₹18 per kwhr (unit). Today it is delivered at ₹6 a unit.

The recent supply offer made by multinational firm SkyPower when it took part in the bidding process for solar power supply in Madhya Pradesh, was at ₹5.05 to ₹5.20 per unit in the bids it submitted for 150 MW. SkyPower has also won three more projects in Telangana quoting ₹5.17 for one project and ₹5.26 per unit for two other projects. The bids were opened on Monday.

The ₹5.05 per unit is the lowest that has been quoted so far in the country.

This decrease in cost of project implementation and in the supply of power is being attributed to several developments, some global and others local. The developments include changes or improvement in technologies, drop in cost of input material like modules and a significant revision in the tariff rate at which this renewable power is delivered.

Narendra Surana, Managing Director of Surana Solar, puts his finger on some of the reasons. He says, “Earlier, the tariff offered for development of solar projects was high and attractive. This resulted in a number of projects coming up and creation of manufacturing capacities in Europe, China and India. Thereafter, lower demand resulted in huge capacity and glut in the market. The prices of solar panels dropped in 2012-13.” Gautham Nalamada, Photon Energy's Managing Director, feels it is module costs that have given way to this reduction. He explains, “The module price, which was $3.5 per watt in 2010, had come down to $ 1.2 per watt couple of years ago and is now quoting at 50-55 cents per watt. Since the module accounts for about half of the total capital cost, this is set to pave the way for an accelerated phase of project implementation.”

Till 2010 the tariff for power supply was extremely high across the world.

Around the time when the Manmohan Singh Government came up with the Jawaharlal Nehru National Solar Mission, there was a decrease in demand leading to a crash in the global solar market, particularly in Europe. This resulted in a drop in tariffs globally. Sujoy Ghosh, India Head, First Solar Power, explains that technologies like the thin film PV have improved efficiencies. In addition, the way the modules are mounted now has helped save space, thereby lowering the project cost.

Coming back to the tariff issue, Surana feels that the Madhya Pradesh project offer in the ₹5 per unit realm is possible only when a developer has access to lower interest rate loan of 2 to 3 per cent. “With loans at 13-14 per cent interest in India, it is difficult to offer such a price.”

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