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Solar tariff to go up by 20 to 25 paise/unit in forthcoming bids: Icra

Solar tariff to go up by 20 to 25 paise/unit in forthcoming bids: Icra

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Solar energy tariff is likely to go up by 20-25 paise per unit in upcoming bids for projects as compared with rates seen over the past six months, according to an ICRA NSE -0.99 % report on renewable energy. This assumes significance in view of India’s ambitious target to achieve 450 GW of renewable energy by 2030.

“The increase in (solar) module prices and the recent hike in GST (good and services tax) rate for solar power equipment are likely to increase the tariffs in the forthcoming solar bids by 20-25 paise per unit from the levels seen over the past six months,” the report stated.

Nonetheless, it said that the tariffs are likely to remain competitive at less than Rs 3 per unit.

The increase in cell and module prices is likely to moderate the debt coverage and return metrics for the projects bid out over the past one year and with expected commissioning over the next 6-12 months, it said.

Further, developers are likely to face delays in execution owing to the supply chain constraints arising from disruptions in China, it added.

The availability of adequate timeline buffer under the PPAs (power purchase agreement) or securing timeline extension from the bidding agency remains important, Icra said.

The price of imported Mono PERC PV modules in India has increased by over 35 per cent from 19-20 cents/watt in December 2020 to 22-23 cents per watt in June 2021 and further to 27-28 cents per watt in October 2021.

This is mainly driven by an increase in the polysilicon prices, a key input for PV modules along with the recent supply-side disruptions in China, it stated.

The disruption in manufacturing operations across the value chain of solar PV modules in China owing to the prevailing power cuts is leading to elevated price levels for solar PV cells and modules. Given the likely continuation of these power cuts amid the emission control targets in China, the prices are likely to remain elevated in the near term, it also stated.

Apart from the polysilicon, the cost pressures for solar power projects are arising from the sharp jump in the steel and aluminium prices which are used in mounting structures and back sheets for solar PV modules respectively, it said.

Source : PTI

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Anand Gupta Editor - EQ Int'l Media Network