India’s solar power tariffs have hit a new record low of ₹2 per unit.

Can you relate this?

We have such a lower cost of solar energy. Then why do we rely on coal powered thermal power plants?

Solar energy scenario in India

• India has an ambitious target to increase its solar power base – by 2022, it wants to quadruple its current solar capacity to 100GW.
• A number of industrial-scale solar energy plants have come up in the past few years.
• The government-backed company Solar Energy Corp. of India (SECI) has been auctioning solar energy capacity to various private developers using a bidding process that favours the cheapest tariffs.

Low tariff may seem lucrative

• The record low solar tariffs are mainly due to the “reverse bidding” process, which selects the cheapest bidder.
• India is now said to be considering a ceiling on solar tariffs – a cap of ₹2.5 ($o.035) and ₹2.68 ($0.038) per unit – for solar power companies that use both domestic and imported equipment.
• India imports over 90 per cent of solar equipment including cells and modules from overseas, mainly from China and Malaysia.
• The govt. now is in proves to impose a 25 per cent safeguard duty on solar equipment imports to protect domestic manufacturers, which could further put pressure on the razor margins of solar developers.

Impacts of such low tariff

• With the steep drop in prices, there are also concerns about the quality of the equipment being deployed, raising questions about future regulation and related costs.
• The infrastructure of many solar plants in India didn’t meet many environmental stress factors and technical standards, according to a study.
• India also has a target of increasing its rooftop solar capacity to 40,000 megawatts (MW) by 2022 similar to trends in many European countries.
• But, here too, prohibitive costs of solar equipment have kept many residential property owners from switching to rooftop solar despite a government subsidy.

Back2Basics: SECI

• It is a company of the Ministry of New and Renewable Energy, Government of India, established to facilitate the implementation of the National Solar Mission (NSM).
• It is the only Central Public Sector Undertaking dedicated to the solar energy sector.
• The company’s mandate has been broadened to cover the entire renewable energy domain and the company will be renamed to Renewable Energy Corporation of India (RECI).
• It is responsible for the implementation of a number of govt. schemes, major ones being the solar park scheme and grid-connected solar rooftop scheme etc.
• It has a power-trading licence and is active in this domain through the trading of solar power from projects set up under the schemes being implemented by it.

Reverse bidding Process

In a reverse auction, the buyer puts up a request for a required good or service. Sellers then place bids for the amount they are willing to be paid for the good or service, and at the end of the auction the seller with the lowest amount wins.

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