Solar tariff drops below cost of coal-fired power

Solar power tariffs appear to be on a free fall in India to find a new floor at Rs.2.62 per unit, some 18% lower than the average price of Rs.3.20 charged by India's largest generation utility, NTPC, for electricity generated by its coal fired plants.

The historic low was quoted by Phelan Energy and Avaada Power during bidding for packages of 50 MW and 100 MW, respectively, of the fourth phase of Bhadla solar power project in Rajasthan. Softbank Cleantech won a100 MW packet quoting Rs.2.63 per unit.

This beats the previous low of Rs.3.15 per unit quoted by Solairedirect in the auction for NTPC's 250 MW project at Kadapa in Andhra Pradesh last month. The lowest tariff--levelised over 25 years--quoted for a grid-connected solar power project before that stood at Rs.3.30 per unit, on a basic bid of Rs.2.97 aunit for the first year, quoted in February for the first unit of the 750 MW Rewa solar park in Madhya Pradesh. Solar power tariffs have been falling in the last three years due to the Narendra Modi government's thrust on raising India's green energy footprint and reduce oil imports by 10% by 2030.

After coming to power in 2014, the Modi government metamorphosed the UPA 's National Solar Mission by setting a target of building 175 GW of green energy capacity by 2030. But a section of industry players cautioned that the “hidden costs“ of integrating such large-scale plants into grid should be considered when calculating the landed cost.

According to these players, grid-connected solar photo voltaic plants use transmission lines only 20% of the time compared to 70% by traditional plants, which makes it 3.5 times costlier to wheel solar power.

Also, operation of conventional plants will have to be ramped down or up to maintain balance between supply and demand. This would result in lower plant load factor for conventional power stations, which are expected to drop to 50% levels from current 60%. This, in turn, would push up the fixed cost component in the average cost of power and push them out of favour with state utilities.

Solar tariffs had sunk to Rs.3 per unit quoted by Gurgaon-based Amplus Energy Solutions in auctions conducted by Solar Energy Corporation of India.

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