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The government’s policy interventions such as waiver of transmission and wheeling costs have helped solar tariffs plunge, power ministry’s joint secretary Jyoti Arora said at the Economic Times Global Business Summit.
Solar tariffs have plunged below Rs 3 per unit at the latest auction in Madhya Pradesh, but experts were unanimous that the sector is capable of standing on its own feet with policy support from the government.
“Hidden costs like the cost of transmission and balancing have been provided for by the government in this case,” Arora said. She said the low tariff could be achieved due to government support. “RPOs (renewable purchase obligations), VGF (viability gap funding), green energy corridor, etc, have all helped in enabling the industry to find its feet,” she said.
Varsha Joshi, Delhi’s power secretary and former joint secretary in the new and renewable energy ministry, said the wind power tariffs have fallen as the government has set up enabling transmission network. India’s first wind power auction in February saw wind tariff dropping to Rs 3.46 per unit.
“The green energy corridor is about establishing transmission where there is no source. If work hadn't begun on it, the wind bid wouldn't have been successful,” she said. Joshi said the wind auction aims to provide wind power beyond the nine states which have strong winds. “We made it such that the non-windy states, which need to fulfill their RPOs, can buy wind power from windy states,” she added.
IFC senior investment officer Bhanu Mehrotra said the low solar tariff was achieved because the Rewa bid created a business model addressing each and every risk. “How can low-cost renewables be a starting point of innovation? The initial support provided by the government has to move away,” he said.
Ashish Khanna, CEO at Tata Power Solar, said although falling tariffs were good for the renewable energy market, the industry does not yet have a culture of encouraging research sufficiently. “In a country where we are at right now in renewables, what value engineering should we add?” he asked.
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