The Great Green Gamble

Recent rock-bottom bids in solar and wind power have changed the renewable power business, but viability of such projects is doubtful.

- Anilesh Mahajan

On the midnight of April 11, it was celebration time at the Paris headquarters of French clean energy firm Solairedirect SA. Their Indian arm had bagged a contract to build a 250 MW solar power plant at National Thermal Power Corporation’s, or NTPC’s, mega solar project at Kadapa in south central Andhra Pradesh. Prior to this, the Indian arm of Solairedirect was managing 182 MW projects in India – 97 MW operational and 85 MW under construction.

While it was a big win for the company, what excited many in India was the tariff – it promised to sell electricity at ₹3.15 per KWH. This is lower than the levelised tariff of ₹3.29 (₹2.97 a KwH in first year, with rise of ₹0.05 every year) quoted two months ago for the 3x250 MW Rewa Ultra Mega Solar project, for which Mahindra Renewables, ACME Solar Holdings and Solenergi Power had bid. That was 24 per cent less than the previous low of ₹4.34 a KWH, bid by Finland’s Fortum Finnsurya Energy in January 2016 for a 70 MW project in NTPC’s Rajasthan park.

Renewable power tariffs in India have been sliding for quite some time. In solar, the trigger has been sustained crash in prices of Chinese solar panels; the fall has been 80 per cent in the last seven years. In wind power also, the fall in tariffs has been steep. In the last auction, they had touched ₹3.46 a KWH.

Now, the question is — are these rock-bottom bids viable? Or will they make projects unsustainable and, finally, come to haunt both power companies and banks, just as what had happened in the conventional power sector a few years ago? Also, while the government’s targets for renewable power capacity are agnostic towards wind and power, is the fall in wind power tariffs sustainable or driven purely by the need to compete with solar power players, who are reaping the windfall of falling solar panel prices?