Indian Solar Energy Tariff hit a Record Low Despite COVID Crisis

A large recent auction of solar projects by the state-owned company SECI resulted in an all-time ever low tariffs of INR 2.36 which is around USD 3 cents per kWh. The 2000 MW tender saw good participation by both local as well as foreign companies. The lowest bid was made by Spain’s Solarpack with other companies such as Renew and Enel also being very near to that price. This new all-time low solar energy price is lower than the earlier lowest solar price by around 4% and shows that the current crisis has not really affected the industry supply chain as such.

Investor interest in India’s renewable energy industry remains extremely strong despite the recent setbacks that were experienced due to policy and regulatory issues faced in Andhra Pradesh as well as some of the supply chain problems due to the COVID crisis. While there has been news that financing challenges for Indian developers have increased and lenders are reluctant to lend to Indian developers, the low prices seen in the recent tender show that is not that much of an issue.

Also, read COVID Crisis allows Indian Solar Companies to Opportunistically Rescind on Irrationally bid Contracts

The overall Indian power industry is going through a crisis with collections from consumers being difficult and the overall power demand going down with many industries and commercial establishments being shut. The renewable energy industry has done much better than the thermal coal power generation sector as the must-run status of wind and solar energy plants have ensured that the economics of the renewable energy industry remains robust. The low prices vindicate the strong business case of the solar industry and will help India move forward in its ambitious target of achieving 40% off its overall power generation capacity from renewable energy by 2030.