Solar energy prices are crashing through the floor in India.
In the last three months, solar tariffs have dropped by over 25%, with much of the recent action focused around Rajasthan’s Bhadla solar park, a 10,000-hectare facility on the edge of the Thar desert.
At an auction for 500 megawatt (MW) of capacity at the park on May 12, the state-run Solar Energy Corporation of India (SECI) managed to discover a record-low tariff of Rs2.44 per kilowatt-hour (kWh). The previous low was two days before that when tariffs hit Rs2.62 per kWhduring auctions for another phase of Bhadla solar park.
At such rock-bottom prices, solar power is even cheaper than India’s coal-based thermal power plants. The country’s largest power company, NTPC, sells electricity from its coal-based generation units at a princely Rs3.20 per kWh.
Moreover, India’s solar-generation capacity is expected to touch 8.8 gigawatts (GW) this year (a jump of 76% over 2016) to become the third-largest solar market in the world, according to renewable energy consultancy Bridge To India (BTI). And, on the back of prolific growth in non-conventional power, consulting giant Ernst & Young reckons that India is the world’s second best market for investing in renewable energy.
So, it really should be party time for India’s solar sector—except that it isn’t.
Instead, there is real fear that, with such low tariffs, many of the country’s solar projects could turn unviable.