A solar disruptor for SEB revival plan

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The doubling of the coal cess may end up undermining the revival plan for state power distribution companies (discoms). That’s because the cess will further diminish the competitiveness of coal-based electricity at a time when renewable sources of power are getting cheaper.To be sure, thermal tariff is still lower. NTPC Ltd’s average rate stood at Rs.3.21 per unit in the first nine months of this fiscal year, a good rupee less than the cheapest solar power rates. But when state discoms pass on the additional cess to end-consumers, the tariff would rise by 3-7% or 9-13 paise per unit, estimates Nomura.Now, note that this will be added aggravation for industrial and commercial consumers. This set of consumers is already paying high tariffs—as much as three times the average NTPC rate and double the solar rates in some states.As solar gets cheaper and thermal power turns expensive, the viability for moving to their own renewable energy source gets better. The decentralized nature of solar capacity—you can put panels on rooftops—and the government’s own push to step up renewable energy are key drivers.


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