SoftBank led SB Energy has stated that India’s lowest solar power tariffs are financially viable given the sharp fall in module prices and ample supply of debt finance for energy projects.
Manoj Kohli, executive chairman of SB Energy, recently stated that the company’s tariff bid of ₹2.45/kWh (3.8¢/kWh) for a 300 megawatt solar power project in Rajasthan is aggressive but financially viable. Kohli stated three major reasons for the sharp fall in tariff bids in India’s solar power market over the last few months.
Price of Chinese solar power modules have fallen significantly over the last few months has been a major reason for conjugated fall in tariff bids world over, Kohli said. Chinese exports have increased as the country’s domestic solar power program has slowed down.
Global banks have also increased exposure to renewable energy projects, Kohli added. Several of the cheapest solar power projects across the world have received debt funding at very low rates. These projects include the 200 megawatt phase II of Dubai solar power park and the 750 megawatt Rewa solar power park in Madhya Pradesh, India.
Kohli also stated another global trend in the solar power market. Larger projects are being auctioned and commissioned now than at any time in the history. This results in lower costs due to economics of scale.
The three reasons mentioned by Kohli are applicable to the global solar power market in general but there are India-specific reasons as well for the declining prices. Withdrawal of inter-state transmission charges, increased renewable energy installation and consumption targets and efforts to improve the financial health of power utilities have contributed significantly to the decline in solar tariff bids in India.