Rock-bottom solar power tariffs might spell good news for consumers and the environment alike, but for developers, it is now a matter of concern. Ironically, the problem is of their own making to a large extent. With aggressive bidding, solar power tariffs have been pulled down to Rs 2.42-2.65 per unit in the latest rounds, and this has made it difficult for companies to stay afloat. As a result, they have been sourcing inferior quality equipment like rooftop solar panels, inverters and mounting structures.
According to the Indian Express, as Niranjan Patil, head of Bengaluru-based renewable energy consulting and audit firm Lavancha, points out, this has resulted in complaints of cracked solar panels and corrosion of components in less than two-three years of installation across the country.
And while suppliers offer guarantees and warranties for replacement, enforcing these becomes a challenge when products are sourced from tier-2 and tier-3 producers in China. Sources indicate that smaller suppliers vanishing in a few years is also not uncommon. Gyanesh Chaudhary, MD and CEO of Vikram Solar, India’s largest supplier of Solar PV panels, says the problem has always existed, but is likely to become a serious issue when many more projects come on-stream over the next couple of years.
Industry leaders like Sumant Sinha, founder & CEO of ReNew Power, had earlier warned that those bidding aggressively would eventually run into trouble. He had portended that given the business economics, many of the projects would become unprofitable. Industry experts also feel that the auction system might have helped bring down tariffs, but the aggressive bidding is not good for the health of the developers and the sector. Incidentally, industry majors like ReNew Power and Tata Power have not been very successful in recent tenders floated by state power bodies due to their higher bids.
