The improvement in tariff competitiveness of solar PV energy will remain favourable for power distribution companies, rating agency Icra said today.
In bidding concluded on April 12, 2017 by NTPC for award of 250 MW solar PV project in Phase II ? Batch II (Tranche 1) in Kadapa Solar Park in Andhra Pradesh, the competitive bid tariff discovered remains the lowest at Rs 3.15/kwh, Icra said in a statement. This in turn implies a further decline of 4.5 per cent over the previous bid tariff at Rs 3.33/kwh for Rewa Solar Project in Madhya Pradesh during February 2017. This further signifies a further improvement in the cost competitiveness of solar energy against both alternate renewable as well as conventional energy sources, in Icras view.
With declining module price levels and the bidding process adopted, the tariff competitiveness for solar PV projects has been showing an improvement in the last three year period, as seen from a decline in the weighted average bid tariff of Rs 6.79/kWh in CY2014 to Rs 5.01/kWh in CY2016. An improving tariff competitiveness of solar PV energy thus remains favourable for the distribution utilities, Icra said. “Viability of such tariff for project developer from its credit perspective will be critically dependent upon the availability of long tenure debt (upto 18-20 year post project completion date) at cost competitive rate as well as more importantly, its ability to keep the cost of PV modules within the budgeted levels and execute projects in a time-bound manner,” said Sabyasachi Majumdar, Senior Vice President and Group Head, ICRA Ratings.