CRISIL has pointed out low tariffs and high import duties as the challenges of solar developers to set up solar power projects in India
According to a recent research analysis, around Rs. 28,000 crores of solar power projects are finding their implementation unviable in India due to the current weakening value of rupee. According to CRISIL, an analytical firm that offers ratings, research, and risk and policy advisory services, the falling currency has raised the import of solar modules and establishing the solar power project costs in India.
Subodh Rai, Senior Director, CRISIL Ratings has informed that the firm’s analysis points out about Rs 30 lakh per MW increase in setting up a solar project against every 10 per cent fall in the currency. He further cited that India imports more than 90 per cent of solar modules and the whole process becomes costlier with the rupee falling further.
Low tariff rates
Solar project developers have directed toward the low tariff rate of Rs. 2.75 per unit, which later dropped further to Rs. 2.60 per unit behind the unviable engagement with solar projects worth a combined capacity of 5,500 MW in India.
High import duty
Developers are facing difficulty to cope up with higher import costs on solar modules. From July 2018, the import duty was raised to around 15-25 per cent for the next two years. However, the move would be implemented after the official verdict of the Odisha High Court.
The director further added that the impact of higher imports and lower tariffs amidst weakening rupee would raise the costs of setting up the projects by about 20 per cent. This, in turn, would have a larger impact on the target of achieving100,000 MW solar capacity by 2022.
The solar industry of India has been facing ups and downs over the past few months following these issues. The Solar Energy Corporation of India (SECI) has also extended the deadline for bid submission to set up its wind-solar hybrid renewable energy capacities for the fifth time and scheduled November 14, 2018, as the fresh date. The association is reconsidering the concerns of solar developers in the country.
