Falling solar tariffs worry wind industry

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The domestic wind power industry is feeling the pressure of low solar tariffs.

In the recent auctions of Madhya Pradesh, solar prices fell to as low as ₹2.97 a kWhr for the first year, or ₹3.29 levellised over a 25-year agreement period. Will solar eject wind power out of the market?

The wind industry players put up a brave front, but beneath the veneer, the furrowed brow shows up.

As it is, ‘solar’ has seized much of the mindshare of energy purchasers, such as state government-owned electricity distribution companies (discoms).

For sure, the MP auctions are unique, given that the prices quoted are under certain favourable terms of the tender, such as guarantees for payment and grid availability. There are murmurs about the viability, quality and durability of the projects, with ‘see what happens after four years’ being a common refrain from the detractors.

Yet, the low tariffs have set a new watermark and a mindset sclerosis. The wind industry insiders and observers alike say that there are tough times ahead. The question they face is, if the same terms and conditions as the MP tender are given to you, will you be able to match the tariffs?

The answer is no. One industry leader, a leading wind turbine manufacturer, said that if each favourable condition of the MP tender is taken away and its corresponding monetary value is loaded on the levellised tariff of ₹3.29, then it all adds up to ₹3.79. The wind industry cannot match this price. Wind can survive up till ₹4.20 a kWhr, the industry leader said.

The industry is banking on technology for survival. The industry has a few tricks up its sleeve such as better and lighter machines.

For example, Suzlon will be bringing out its next machine (S-128) which is expected to lower the ‘levellised cost of energy’ by 10 per cent, and another improvement that will make repairing the machines much easier.

However, wind players hope to be able to join hands with solar. Many in the industry said they were eagerly waiting for the policy environment for wind-solar hybrid to clear up — only two states (Andhra Pradesh and Gujarat) have announced their policies, and there are glitches to be ironed out.

“Friends close, rivals closer” is how one wind insider put it.

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