Two neighbouring states Gujarat and Maharashtra have just concluded their solar energy auctions. The former went on to auction a 500 MW solar projects, the latter 1000 MW. While the L1 tariff of Gujarat was INR 2.55 that of Maharashtra was INR 2.71. The lowest solar energy tariff of India is INR 2.44 which has been discovered in three different auctions in the last two years. Changes in laws pertaining to indirect taxes and the imposing of safeguard duty on solar panels have pushed the tariffs close to INR 3. In the subsequent solar energy auctions, tariffs remained high but often less than INR 3 units. Still, states like Gujarat and Uttar Pradesh cancelled their auctions in a bid to achieve lower tariffs.
The solar energy auctions in Gujarat and Maharashtra may now be pointing to the cost correction.
The solar industry had absorbed the impacts arising from GST and Safeguard Duty long back. Although the results of the two auctions cannot be compared but they are showing us the true cost of solar power. Maharashtra is putting a more realistic picture. The L1 cost of solar energy is although higher they are coming down gradually. In Gujarat, on the other hand, the L1 tariffs are cursory. The solar industry views it as a blood bath. The tender design also influences a developer’s appetite to bear the risk.
Meanwhile, The government of India also wants to cap solar energy tariff in India. The tariff will be INR 2.50 and INR 2.68 without and with safeguard duty respectively. At the moment the average solar tariff in India is INR 2.70 which will subsequently go down. The tariffs will remain high in Leh and Ladakh where the government wants to set up a project of 25 GW. Solar energy developers will have to bear the transmission cost in the region.
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