{"id":17573,"date":"2016-01-11T11:06:20","date_gmt":"2016-01-11T05:36:20","guid":{"rendered":"http:\/\/www.greenworldinvestor.com\/?p=17573"},"modified":"2016-01-11T11:06:20","modified_gmt":"2016-01-11T05:36:20","slug":"indian-regulator-proposes-drastic-reduction-in-solar-project-prices-is-it-overreaching-itself","status":"publish","type":"post","link":"https:\/\/iiec-india.org\/greenworld\/2016\/01\/11\/indian-regulator-proposes-drastic-reduction-in-solar-project-prices-is-it-overreaching-itself\/","title":{"rendered":"Indian regulator proposes drastic reduction in solar project prices \u2013 is it overreaching itself"},"content":{"rendered":"<h1>My view on Solar project prices in India<\/h1>\n<p>The <strong>Indian central electricity regulator <\/strong>generally publishes solar electricity reference prices each year, based on <em>equipment and financing costs<\/em> with reasonable equity returns. During the last year prices for solar PV were around INR 6\/kWh, with a total equipment cost of INR 6 crores\/ MW. However current bids are being seen in the range of <strong>INR 4.5-5.5 \/kWh<\/strong>, as increased competition and a well-entrenched supply chain has seen a sharp fall in prices. Financing cost are also reducing in India, with a <em>fall of 125 bps in the RBI interest rates<\/em>. This has meant that developers have bid aggressively to capture this massively growing market. Now the Indian regulator CERC is proposing a drastic reduction in the <a href=\"http:\/\/www.cercind.gov.in\/2015\/orders\/SO17N.pdf\" target=\"_blank\" rel=\"noopener\">equipment prices to just INR 5 crores\/MW for the next year.<\/a> They are being aggressive in extrapolating the current fall in solar panel prices of around 11-15% to next year as well. <em><strong>This is wrong in my view<\/strong><\/em> as the solar component prices are increasing.<\/p>\n<p>While the decrease in solar inverter prices from around INR 40 lakhs\/ MW to INR 30 lakhs\/MW may be justified, solar panel prices may not decrease this much leading to a distress for developers and state agencies which use this reference price. The costs of construction as well as mounting structures have also been sharply reduced, with land prices being kept constant. This means that if the prices increase in any part of the solar project, then the viability of the entire project may come into question.<\/p>\n<p>There is no doubt that solar prices will <strong>decrease by 3-6% annually<\/strong> over the coming decade, however projecting a sharp decrease of 10-15% in prices over the next year is too aggressive. Nobody knows how the world situation will change and keeping such aggressive targets may boomerang on the sector in my view. The commission is proposing a solar panel price of just 46.5c\/watt for FY 16-17, compared to the average spot price of 55 cents\/watt in the international market today. While the solar panel prices in India are around 50 cents\/watt, note that the efficiency levels and quality of these panels are hardly the best. Even China where competition is high and logistics cost are low, the prices of panels are around 60 cents\/watt.<\/p>\n<p><a href=\"http:\/\/www.greenworldinvestor.com\/wp-content\/uploads\/2016\/01\/111.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-17574\" src=\"http:\/\/www.greenworldinvestor.com\/wp-content\/uploads\/2016\/01\/111.png\" alt=\"111\" width=\"1024\" height=\"840\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>My view on Solar project prices in India The Indian central electricity regulator generally publishes solar electricity reference prices each year, based on equipment and financing<span class=\"excerpt-hellip\"> [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","content-type":"","footnotes":""},"categories":[30,45],"tags":[],"class_list":["post-17573","post","type-post","status-publish","format-standard","hentry","category-india-green-stocks-greeninvest","category-solar-renewable-energy-greeninvest"],"_links":{"self":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts\/17573","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/comments?post=17573"}],"version-history":[{"count":0,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts\/17573\/revisions"}],"wp:attachment":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/media?parent=17573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/categories?post=17573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/tags?post=17573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}