Naysayers may have doubted the sustainability of the dramatic reduction in solar tariff in India in recent years but an analysis of comparative date shows that low solar tariff is here to stay.
The lowest solar tariff of Rs 2.44 a unit was discovered for the Bhadla solar project in Rajasthan, for which bidding was conducted in May, which translates into 4 cents a unit.
In comparison, solar tariff in Abu Dhabi in May last year was 2.99 cents a unit but it later came down to 2.42 cents in September.
During May 2016, solar tariff was 1.99 cents a unit.
Solar tariff in Chile during last August was 2.91 cents a unit. In Mexico, solar tariff last October was 2.7 cents a unit.
Reduction in solar power tariffs depend upon several factors including solar irradiance, project cost, debt equity ratio, cost of financing, return on equity, operation and maintenance cost, Internal Rate of Return (IRR), guaranteed off take and payment guarantee, among others.
These parameters may vary from country to country and therefore direct comparison cannot be done.
But the falling price of solar cells and modules in the world market does indicate that solar tariff in India has not been artificially driven down.
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