Good news: tariff cut is revolutionizing India’s solar industry

The solar energy industry in India is revolutionizing the energy sector with tariff cuts. Latest trends in solar field in Rajasthan and Andhra Pradesh show that tariffs have fallen to nearly Rs 4.5/unit. This is near to the tariff charged by State Electricity Boards in most states. For business and industry it is between Rs 10 to Rs 15.

Recent tenders for auctioning solar fields are creating reduced tariff bids. The latest is the Bhadla Solar Park in Rajasthan where one bidder won by offering Rs 4.34/unit. Bhandla is one of the largest solar parks in India with Solar Energy Corporation working as the nodal agency for the development of the project. NTPC has made a bid for the 400 MW project at Bhandla and got the Rs 4.34/unit offer from Finland-based energy firm Fortum Finnsurya Energy.

At Bhadla, several other firms offered below Rs 4.5 and won contract with NTPC. Though merits of NTPC and several other factors played a role, the industry’s tariff reduction momentum is notable for the country’s energy security.  

Rajasthan and Andhra Pradesh are becoming favorite destinations for solar industry as large number of projects quoting lower than Rs 5/unit mark. High sunlight incidence has made the two states as preferred locations.

Worldwide, the industry became remarkable for its cost reduction achievements. In the US, solar fields are generating electricity at 75% lower than the cost they have charged in 2009.  

According to the estimated of International Energy Agency (IEA), 16% of global electricity will come from solar by 2050 compared to less than 1% now. Technology forecasters predict that price of solar panels will fall by another 40% in the next ten years.

Tenders in the last one year shows that the technology revolution that brought down costs is revolutionizing India’s solar energy industry as well. Tariffs are coming down steeply. Latest tenders for solar energy fields are attracting investor’s participation like oil fields in the past.