India’s tariff-based competitive bids for solar power contrasts greatly with similar forays in other countries, according to Adarsh Das, CEO and co-founder of SunSource Energy, a solar EPC firm.
Speaking to BusinessLine, Das said: “India is an unnecessarily competitive market because of the system here. A lot of the expansion of solar in India is taking place because of government intervention. And government policies are all about getting people to take financial risks on projects. So if the project does not work out, the government loses nothing.”
The company has near to 100 projects in India largely focused on ground mounted and rooftop solar power units for private institutions. It is one of the few in the India to have explored international waters for harnessing the sun’s potential, with an ongoing 100 MW project in the Philippines.
Comparing the scenario in India to the one in island nations such as the Philippines, Das said: “Outside India, it is more about showing the developer’s capabilities and track record. And based on these, there is a competition on tariff, but it is not the only parameter. Island nations like the Philippines do not take to coal based power generation very well and hence tariffs are higher there.”
Falling prices
Commenting on the recent bids for developing solar power projects at record low tariffs of less than ₹4/kWh, Das said: “There is a lot of speculation regarding the falling prices of solar panels when developers are bidding in India.” Explaining the possible rationale behind these lower tariffs, he said newer entrants have very speculative views regarding the levels to which costs can be brought down.
“For a 100 MW project, if there have to be reasonable returns, like 12 per cent or 13 per cent internal rate of return (IRR), I would not be comfortable bidding at less than ₹4.50/kWh,” he observed.