Low solar power tariffs discovered in recent rounds of bidding for solar power projects has raised questions on the viability of projects, Sajjan Jindal, Chairman and Managing Director of private power producer JSW Energy, has said.
“We are now seeing a lot of focus on solar power, with auction-based tariffs reaching all-time lows. Although a part of the reduction can be attributed to decline in equipment costs, it also raises questions on the long-term viability of projects at such low tariffs,” Jindal said in his speech at the company’s 23rd Annual General Meeting in Mumbai.
He added the government has set ambitious targets for setting up renewable capacities and hence the viability of projects will be a crucial factor to achieve the long-term goal of energy security. “In this context, the recent draft proposal of the government to include hydropower as renewable energy and to stipulate a mandatory hydropower obligation is a welcome step,” he said.
JSW Energy, part of the $11 billion JSW Group, is evaluating various opportunities involving next-generation technologies which are going to be disruptive in nature in the energy space, Jindal said. The current stress in the power sector could lead to consolidation which will offer good prospects for future investments, he added.
Talking about the future of the energy sector, Jindal said India’s long-term energy appetite is enormous but a large proportion of the demand is latent. “The GST rollout is also likely to boost economic growth over the medium term as it improves efficiency of goods movement between states, avoids tax cascading as well as strengthens tax compliance and governance. This is likely to boost GDP growth rate to 8 per cent or above, consequently driving power demand,” he said.
According to Jindal, the power sector is currently struggling with multiple issues including sluggish industrial demand, lack of long-term Power Purchase Agreements (PPAs) and ill financial health of distribution utilities. He, however, also noted the government has taken multiple policy initiatives and path-breaking measures to provide electricity for all at a fair and just price.