Climate Change / Sustainable Development

Lowest solar tariff underpins India's clean energy transformation: IEEFA

Gujarat's 500 MW solar tender results have delivered India's record low tariff of Rs 2.44 per kilowatt and this underpins the country's transformation to clean energy, US-based Institute for Energy Economics and Financial Analysis (IEEFA) said on Tuesday.

Sep 19, 2018
Gujarat's 500 MW solar tender results have delivered India's record low tariff of Rs 2.44 per kilowatt and this underpins the country's transformation to clean energy, US-based Institute for Energy Economics and Financial Analysis (IEEFA) said on Tuesday.
 
Gujarat Urja Vikas Nigam Ltd (GUVNL) on Monday repealed the equivalent auction they held back in March which saw the lowest bid at an unacceptable Rs 2.99 per kilowatt.
 
Five months on, not withstanding that the solar industry faces headwinds of 25 per cent of import duties on Chinese solar modules and the recent 10 per cent currency devaluation, this announcement by GUVNL is a great outcome amidst the road-bumps of constant policy flip-flops, Tim Buckley and Kashish Shah said in a joint statement.
 
The former is the Director of Energy Finance Studies, Australasia, while the latter is a Sydney-based Financial Analyst.
 
Probably, the lowest solar tariff yet when viewed in dollar terms -- $33.70 per MWh, -- flat in nominal terms declining in real terms annually over the 25 year life of the contract.
 
"We note the tariff does not incorporate the 25 per cent safeguard duty on modules. In our estimation, this will result in a pass-through of about 25 paise per kWh to GUVNL.
 
"Still this is an example of sustainably low solar tariffs in India, regardless of its protectionist stance on module imports. The solar modules are progressively becoming ultra-efficient," the statement said.
 
IEEFA notes the huge technology breakthrough potential of the new Pervoskite solar cells combined with bifacial modules, trackers and other innovations together which could see solar reach of up to 40 per cent efficiency within a decade from sub-20 per cent efficiency delivered by current Indian projects.
 
With gains from production scalability the modules prices are on an accelerated deflation path and this will reflect on ever-lower solar tariffs in India, IEEFA forecasts declines of 10 per cent annually for the next five-10 years.
 
"We are as optimistic as ever that deflation through technology disruption will make renewable energy an even bigger winner for India over the medium term. 
 
"The energy security, deflation and reduced pollution benefits combined are a compelling proposition. The global climate benefits are just an added bonus," it added.

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