With solar energy rates crashing below that of the coal-fired thermal power, states even with land constraints and lower irradiance are now warming up to the renewable energy. In a first in the country, the Uttar Pradesh government is setting up 750 megawatt solar plant at Badhla, near Jodhpur and draw the power in their state from the transmission network of Power Grid Corporation of India.In a meeting last week in New Delhi, top officials from the ministry of new and renewable energy, Solar Energy Corporation of India (SECI), representatives from UP and Rajasthan government, laid out a roadmap to carry out the reverse auction and award the project by August 31 with a target to start generation from October 2018.
“Recent bids for solar projects have witnessed sharp decline in the tariffs at which the developers want to sell power. Central transmission unities charge no fees for wheeling out power from one state to another. In a recent auction for plants in Rajasthan, tariffs have come down to Rs 2.44 per unit. Whatever tariff is discovered through the auction, the UP government will get the power at the same rate in their state even though the plant is located in Rajasthan,” said B K Doshi, managing director of Rajasthan Renewable Energy Corporation.
The Centre mandates the states to mix certain portion renewable energy to their total consumption energy under renewable purchase obligation (RPO) but its implementation has been patchy. Solar requires lot of land and many states don’t have large tracts of infertile land. Secondly, the number of sunny days and irradiance are also factors as the volume of power generation depends on them. “Unavailability of infertile land is a big issue for states like Jharkhand, West Bengal, Bihar, Odisha and UP. But, that is no more a hurdle. Under the open access system, they can put up plants anywhere and draw power in their states without any additional cost of transmission charges,” added Joshi.
While experts in the sector feel that the current lower tariffs are not sustainable, there seems no lack of appetite from investors. “In the past one year, the prices of solar modules have fallen by 30%. Also, the cost of funds have come down substantially. For companies who look for economy of scale, the current tariffs are expected to meet the internal rate of return they expect from the projects,” added Joshi.