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Solar power prices hit historic low, cheaper than fossil fue

Source:未知 Date:2017-03-01- 15:25 Click: Secondary

The price of electricity production using solar energy is increasingly outpacing other alternate sources. According to a report in the World Economic Forum, Solar and wind energy are finally at par or cheaper than fossil fuel capacity in more than 30 countries.

This solar park in Madhya Pradesh will also be used to power the Delhi Metro, which means ticket prices will get much cheaper as well as the clean energy initiatives will reach newer heights. (Representative Image: Reuters)
 
The price of electricity production using solar energy is increasingly outpacing other alternate sources. According to a report in the World Economic Forum, Solar and wind energy are finally at par or cheaper than fossil fuel capacity in more than 30 countries. Recently, following a bidding process, Mahindra Renewables, Solenergi Power and Acme Solar Holdings were awarded the contract to build and operate a 750MW Rewa ultra mega solar park in Madhya Pradesh. This solar park will also be used to power the Delhi Metro, which means ticket prices will get much cheaper as well as the clean energy initiatives will reach newer heights.
 
The contract went for levelised tariffs, all around Rs 3.3, and it is the least that any solar park in India has seen until now. The previous lowest record was NTPC’s Badla solar park for 70 MW unit, in Rajasthan where the tariff bid was Rs 4.34 per kWh. The solar park will reportedly be completed by April 2018, and the expected investments are around Rs 4000 crore to Rs 5000 crore. The bid by the companies started with Rs 4.09, Rs 3.87 and Rs 3.62, excluding the Re 0.33 added in the levelised tariff. Which means, it essentially is Rs 2.979, Rs 2.97 and Rs 2.974 for the first year.
 
The three units constituting the 750 MW solar park will reportedly be developed by SECI and Madhya Pradesh Urja Vikas Nigam Ltd. They have a joint venture celled, Rewa Mega Solar Ltd and it is said to be planning to work on other solar parks in Madhya Pradesh, whose total power generation might go up to 2GW.
 
This new solar power project has struck the iron when it is hot as apart from solar components being cheaper, the Union Budget this year made solar tempered glass, used in solar equipment, as duty-free. It also decreased the countervailing duty on raw materials used in solar equipment to from 12.5 percent to 6 percent. There has been a dramatic fall in the solar module prices in the last year. Crystalline modules in EU spot market also saw a big decline in one year.
 
All these efforts and facts essentially mean that a price effective infrastructure and good safeguard against payment problems and grid disruptions are a good sing for the energy sector in the country. The Rewa solar project is built on a land of more than 3 thousand acres, which insulates against the most dangerous risks usually encountered by power generation projects. Meanwhile, DMRC and Madhya Pradesh Power Management Company will purchase all the power generated from the park. The government should take more such initiatives now so that the country is able to generate huge amounts of power through renewable sources in the next 10-15 years.
 
Yet, there are questions on sustainability because of the low costs and low margins. This is mainly because, even though capital cost is getting lesser, manufacturing costs can grow which poses a risk. Yet, the risk can be reduced by making sure the process of upfront capital investment continues. This will ensure projects are not hampered even in the times of financial stress. Meanwhile, solar power prices are expected to decline to half the price of electricity from conventional sources within a couple of decades. The only issues which need to overcome, are mainly political than technical. The WEF report said, “Contracts are not standardised, regulation varies widely across countries and time, deals are scattered and due diligence is mostly conducted by existing infrastructure teams, on a case-by-case basis.”