Message from Madhya Pradesh: Solar power is here to stay

Message from Madhya Pradesh: Solar power is here to stay

The solar revolution in India marches on, with renewed momentum, if the recently concluded reverse bidding auction for a 750 MW Solar Park in Madhya Pradesh is any indication.

While the rest of the world watched in disbelief, Mahindra Renewables Pvt. Ltd., Acme Solar Holdings Pvt. Ltd. and Sweden’s Solenergi Power Pvt. Ltd. successfully bid Rs 2.979/kWh, Rs 2.97/kWh and Rs 2.974/kWh to build 250MW plants each. These bids are the lowest in the history of solar tariffs in India. The previous lowest bid was Rs 4.34/ kWh for a 70 MW unit in Rajasthan.

A variety of reasons led to this unprecedented crash in solar tariffs, from reduced cost of photovoltaic (PV) modules to risk mitigation for developers and intricate financial planning.

Chinese module manufacturers dropped module prices to less than Rs 20 per watt (30 cents) because of oversupply in the market. Reports say that manufacturers are selling below cost. With major manufacturers already having preferential rates for the Indian market, it is unlikely that module prices.

There is a clause which allows for a 5 paisa escalation per unit in this project for the next 15 years. The successful bidders must have taken this into consideration. The resultant levelised tariff over the lifetime of plants (approximately 28 years), with degradation, works out to around Rs 3.32/kWh.

The remarkably low tariffs discovered in this auction will have far-reaching implications for the country’s solar landscape. With both international and domestic investors looking.. Read More…

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