For about a decade, the prices at which renewable energy companies sold electricity to the utilities have been falling consistently. The factor behind this was China. Now, the tariffs are set to rise and, ironically, the factor again is China.
All along, cheap solar modules and wind turbine components (mainly castings) imported from China helped India roll out a respectable quantum of renewable energy capacity. But now, from the signals emanating from the government, India is determined to pare imports from China. If the upshot is a rise in wind and solar tariffs, so be it.
The government has indicated a basic customs duty of 25 per cent on imported modules and cells, likely to be raised to 40 per cent next year — levels that the Indian solar manufacturing industry is not satisfied with.
The industry expects tariffs to go up to between ₹3.25 and ₹3.50 a kWhr for both wind and solar, rising sharply from ₹2.36-₹2.38 a kWhr, seen in the latest solar capacity auctions (2,000 MW, SECI, ISTS-IX). Wind tariffs are also expected to be allowed to rise to similar levels.