Clean energy: Solar power now cheaper than coal as tariff hits record low

Solar power price touched a new record low in the bidding held for Bhadla Solar Park in Rajasthan. The companies eyeing 250 Mw in the park took the lowest bid to Rs 2.62 per unit, which is less than the average price of coal-based power in the country.

The winning companies are South African solar company Phelan Energy Group Limited which won 50 MW, US Avaada Power Group which bagged 100 MW at same rate. Clean energy arm of SoftBank Group also clinched 100 MW at Rs 2.63/unit as the bidding followed bucket filling method to award quantities in the 750MW solar park. Balance 500MW would be awarded on Wednesday.

This tariff is fixed for 25 years with no escalation and the bidders have sought no viability gap funding from the Government, said officials.

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This tariff is lower than what was received for Kadapa Solar Park (250MW) in Andhra Pradesh where the lowest bid was Rs 3.15/unit. It also lower than Rewa solar park-750 MW (MP) which saw lowest bid of 2.97 per unit, last month, but the levellised tariff comes out to be Rs 3.3 per unit for 25 years. Levellised tariff is inclusive of annual cost escalations in the cost of project which is factored in the final tariff.

Government officials pointed out that this tariff is lower than average coal based price in the country and the grid parity price for solar to match with coal.

"It is understood that this fall in solar tariffs is the result of combination of various factors, most important being the decision of the Government of India to cover solar power by Solar Energy Corporation of India (SECI) under the ambit of Tripartite Agreement for payment security against defaults by State distribution companies. Other factors contributing are about 7-8 per cent higher yield in Rajasthan due to better solar radiation conditions, drop in module prices in International market, and strengthening of Indian rupee against US dollar," said Ashwini Kumar, managing director, SECI. SECI is a wholly owned PSU of the ministry of new & renewable energy which executes solar bidding.

Other reason pointed out by sector expert for aggressive bids was that the numbers of projects to be offered by the states are slowing down, with hardly any major capacity in the pipeline. Business Standard reported recently the pipeline for mega solar power projects from the states is nearly empty.