Union minister of State for Power, Coal, New and Renewable Energy, Piyush Goyal, has many feathers in his cap — the latest being renewable energy — particularly solar energy.
Bidding for three 250 MW solar power projects at Rewa in Madhya Pradesh, was completed recently. And the results were astounding. All three winning bids quoted a tariff of less than Rs 3 per unit. The winning bids were presented by ACME Power, Mahindra Renewables and Sweden-based Solernergi Power.
For the first time, tariff for solar power had fallen below the Rs 3 per unit mark, and was lower than even tariff proposed for many coal-based thermal power projects.
The development gave an immense boost to Goyal’s ambitious programme to install more than 20,000 MW of solar projects by 2022. By the end of 2016, close to 10,000 MW of solar power projects had been commissioned in India.
The three 250 MW projects are expected to be commissioned in about 18 months. Most of the power is likely to be purchased by the Madhya Pradesh Electricity Board, of which Delhi Metro has committed to buy some.
Solar power at less than Rs 10 per unit was unthinkable even a few years ago. Breakthroughs in technology and scale of operations have resulted in costs of solar power projects coming down at a rapid rate since then.
Massive solar power projects, based on new and improved technologies, have been launched in States like Rajasthan, Andhra Pradesh and Madhya Pradesh. It does help that the sun shines through most of the year in India, enabling solar power projects to take advantage of this “free of cost” raw material. Contrast this with thermal power projects that face hurdles like the quality and quantity of coal, and hydro power projects that get caught up in myriad issues, like environment protection and displacement of people.
Yet, analysts are raising questions about how realistic these tariffs are. They do have a point. In the early years of this century, low-tariff wind energy projects were in vogue. Most of them turned out to be duds or tax shelters.
In thermal power too, the previous decade saw the birth of many ultra power projects based on coal that promised a record level of low tariffs. But slippages in coal supply, increased capital costs and higher raw material costs because of imported coal made a mockery of these low tariff rates.
Most such power companies are struggling with debts that appear to be bad loans at the moment. Could solar power projects break the jinx?
