MUMBAI: The cap on solar tariffs proposed by the Ministry of New and Renewable Energy (MNRE) is likely to stay despite solar developers and industry associations raising concern over its negative impact on the viability of solar projects.
The National Solar Energy Federation of India (NSEFI) wrote to RK Singh, Union Minister for Power and Renewable Energy, requesting him not to cap solar tariffs at ₹2.5 per unit.
“Varied solar radiation levels across the country, extreme volatility in module prices, currency exchange rates, prevailing interest rates and return on equity (ROE) are essential factors which must be taken into consideration to arrive at economically viable tariffs,” the letter said.
The Solar Projects Developers Association (SPDA) too wrote to the government cautioning against going ahead with proposed cap.
Industry bodies argue that tariffs close to ₹2.5 per unit have so far been discovered in Bhadla Solar Park in Rajasthan, the State with highest solar radiation in the country, or in case of more recent inter-State transmission system (ISTS)-connected solar auctions. In both cases, the tariffs discovered rely on unique preconditions, the industry bodies argued. They also suggested that fixing tariffs should be done in consultation with the CERC and the stakeholders.
Despite raising the issue at the meeting with the Minister on Wednesday, industry sources say “their voices were not heard”. Instead, the Minister suggested the tariffs should further go down.
“The tariffs are impacted by a range of issues from safeguard duty and overall changes in module prices, to currency risks to various preconditions of the tender such as strength of procurer, availability and price of land, solar irradiation varying from State to State,” an industry player said.
He said tariffs should be determined by market forces to enable the industry grow and attract investors.
The Ministry of New and Renewable Energy had in August directed the Solar Energy Corporation of India (SECI) to bring future solar bids in lot size of 1,200 MW with no upper cap and minimum bid size of 50 MW while fixing the maximum permissible tariff at ₹2.68 per unit, including safeguard duty, and ₹2.5 per unit if the safeguard duty was not paid by the developer.