The current tariffs in the Indian solar sector, hovering at Rs 2.50-2.87 per kWh, have stabilised at rates 20 to 30 per cent below the cost of existing thermal power in India, and up to half the price of new coal-fired power, a new study said on Friday.
It concludes that the lucrative prices provide enormous opportunities to invest in clean, zero emissions solar industry.
The study undertaken by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics compared domestic tariffs and the conditions enabling project returns, with the results juxtaposed against solar developer expectations.
Their findings are published in the report — Developers and Global Investors Snap Up India’s Solar Power Tenders – Decoding Tariffs vs. Returns for Solar Projects in India.
Co-author Vibhuti Garg, IEEFA energy economist, told IANS that their modelling found that as per the current market conditions, tariffs below Rs 2.50/kWh are financially not viable in the Indian solar sector.
“Developers have already reduced their return expectations from 14 to 12 per cent, with tariffs being achieved as low as Rs 2.5/kWh,” said Garg.