Solar bid tariffs to fall on China move

Monday 25th June, 2018

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Solar bid tariffs to fall on China move

PRESS TRUST OF INDIA
Mumbai, June 24
THE DECISION TAKEN by
China to slap deployment caps and reduce feed-in-tariffs for solar projects may lead to a plunge in module prices, which, in turn, is likely to result in further reduction in solar bid tariffs, say experts.
Chinese module price is expected to decline to 28-29 cents from the current average of 33 cents a watt.
China, which added over 50 GW of solar capacity last year, is expected to largely continue the momentum in 2018. However, its recent move to slash subsidies for renewable energy may shave off significant capacity additions this year and expand the net module over-supply position.
"With China accounting for close to 90% of the country's solar module imports in 2017, fall in module prices is expected to benefit those seeking to expand their renewable en-ergy portfolio," Crisil infrastructure advisory director Pranav Master said. He also said solar bid tariffs in the forthcoming tenders are likely to drop as developers will factor in the potential fall in mod-
ule prices following the Chinese action.
Echoing similar views, co-founder of solar advisory firm Gensol Anmol Jaggi said solar bids would become more competitive going forward. "The tariffs, which will be discovered in the next
rounds of inter-state transmission system bidding, could hit a new low. It may even breach the ?2.44aunit pricing thatwas discovered during the Bhadla phase-IV bidding."
Jaggi further said the Chinese module price, which is averaging at 3 3 cents a watt now, is likely to decline to 28-29 cents after this announcement. He said the upcoming 5,000 MW tenders from the Solar Energy Corporation of India will see the bids further falling significantly following China slashing prices.
The recent amendment in competitive bidding guide-
lines for solar projects, which extended the time lines for project execution, is further likely to support the fall in tariffs as developers place orders for modules about six months later to take advantage of the expected drop in module prices, he said.
However, cash-strapped distribution companies, in
turn, will benefit from lower tariffs as it will reduce their power purchase costs and help achieve their RPO obligations, Master said.
On the flip-side, there would be an adverse impact on the domestic module manufacturers given that the price differential between Chinese and domestic modules would widen further from the current 10-15%. "Considering China's recent plan to restrain its renewable energy targets, the rate of imported modules may fall further, hitting the domestic cell and module manufacturers," Vikram Solar chief financial officer Rajendra Parakh said.