Solar Power turns cheaper than thermal? Prices breach Rs 3/Kwh-mark

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 In 2010, the Central Electricity Regulatory Commission had set levelised tariff for solar projects for FY10-11 at R14.95/Kwh. Seven years later, such exorbitant rates sound unthinkable with solar tariffs hitting a new low last Friday, reports Anupam Chatterjee in New Delhi. With the latest auction for the Rewa solar park, tariffs for the first year (non-levelised) for all the three 250-MW units at Rewa have breached the R3/Kwh-mark. The rates hovered around Rs 4.35-R5.05 in 2015-16, which was again much lower than Rs 6.01/Kwh — the lowest rate quoted in 2014.Compare this with the discoms’ coal-based power under long-term PPAs (which is around Rs 2.80-3.60/Kwh) and the cost of procuring gas-based electricity (Rs 4.70/Kwh or more).

Several factors such as fall in infrastructure costs and increased competition coupled with the government’s initiative to raise the renewable component in the country’s overall power generation mix have led to the current low solar rates. This is getting closer to the R1.95/Kwh rate (at current currency conversion rates), which is currently the lowest solar bid in the world (awarded to Solarpack in Chile). Uncannily, the difference between Rewa’s rate and the January average market clearing price of power at the Indian Energy Exchange (IEX) was not even a rupee. (The average rate at IEX was Rs 2.50/unit and the lowest non-levelised bid for Rewa was Rs 2.970/Kwh.)

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