Solar power tariff bids are set to fall sharply over the next three years in India as the country pushes on with capacity addition.
Industry experts told Indian media outlets that solar PV tariff bids are likely to fall to Rs 3.50/kWh (US¢5.2/kWh) over the next three years. The current lowest solar tariff bid in India stands at Rs 4.34/kWh (US¢6.5/kWh). For the last few months the auctions have seen bids between Rs 4.35 and Rs 4.80/kWh (US¢6.5-7.1/kWh).
Solar power tariff bids in India saw sharp correction during 2015 as foreign project developers competed for large-scale solar power projects across the country.
First SunEdison and then Finland-based Fortum Group set lowest tariff bids in India. The second wave of low tariffs came from the Indian project developers. Recently, Indian project developers set tariffs of around Rs 4.35/kWh (US¢6.5/kWh).
Indian experts expect tariffs to fall further due to fall in solar panel prices and improvement in efficiency. The government has also announced massive plans to set up additional large-scale solar power projects. Recently, the government revealed plans to double the capacity earmarked for solar power parks to around 40-50 GW.
Solar power tariff bids have already fallen sharply over the last few years – around 50% over the last five years – as the Indian market attracted investors from world over and found tremendous support from the government which aims to have 100 GW capacity operational by March 2022.
The first solar power auction in India was held in December 2010 under the first phase of the National Solar Mission. Successful project developers had quoted bids between Rs 10.95/kWh (US¢16.0/kWh) and Rs 12.76/kWh (US¢19.0/kWh) for 150 MW solar PV capacity.