Solar power tariff bids in India have fallen to a level too low to make justifiable equity investments, leading solar modules manufacturing company First Solar has said.
Talking to an Indian newspaper, First Solar India country head Sujoy Ghosh said that the competition in solar power auctions has increased significantly which has made the company rethink about its investment strategy.
The current lowest tariff bid for solar PV projects in India is Rs 4.34/kWh (US¢6.5/kWh) set earlier this year. More recent state solar power auctions have seen bids stabilising at around Rs 4.70/kWh (US¢7.0/kWh). According to First Solar, tariffs below Rs 5.00/kWh (US¢7.5/kWh) are not attract for it to make equity investments and set up its own projects.
The company has been participating in the recent state solar power auctions but has not been to secure any projects. The company did win some projects in 2014 in the southern states of Karnataka, Andhra Pradesh and Telangana. All these projects have long-term power purchase agreements with state utilities at tariffs higher than Rs 5.00/kWh (US¢7.5/kWh).
First Solar has 260 MW solar power projects in India. Of this, 115 MW capacity is already operational while the balance is expected to be commissioned by next year. As the competition intensifies in the utility-scale market, First Solar is looking to develop projects for industrial and commercial users who look to reduce dependent on grid-supplied electricity.
In 2015, First Solar had announced plans to set up 5 GW solar power capacity in India over a period of 5-7 years. Now, this goal seems threatened due to the steep fall in tariffs and increasing competition.