Solar tariffs are likely to fall further on a reduction in capital costs and solar power companies’ access to competitive funding, says India Ratings and Research (Ind-Ra).
“Despite aggressive bidding, debt viability of projects with low execution and counter-party risks (especially those under the Jawaharlal Nehru National Solar Mission scheme and Solar Park scheme), is likely to remain intact,” said Ind-Ra in a press release. Solar tariff hit record low of Rs. 4.34 per unit in an auction for a 70-mw solar plant under NTPC’s Bhadla Solar Park tender last month. However, creditors will have to avoid the pitfalls of thermal power where aggressive assumptions and leverage build up at the holding company level to fund equity contributions in underlying special purpose vehicles resulted in significant stress, it said.According to the statement, the solar sector has huge potential and if developed responsibly, it could transform the structure of India’s power sector.