Bridge to India (New Delhi, India) has released a new policy brief that predicts that tariffs will fall to INR 6.2/kWh (USD 0.11/kWh) in the Indian state of Tamil Nadu's newly opened round of competitive bidding for solar electric projects.
This would be the lowest tariff yet seen in the Indian market, lower than the INR 7/kWh (USD 0.13/kWh) tariff for PV projects allocated by the Indian state of Odisha. The Tamil Nadu Solar Policy aims to have an installed capacity of 3 GW by 2015, of which 1.5 GW will be utility-scale solar.
Tariff escalation makes low initial rate possible
Bridge to India calculates that a rate of INR 6.2/kWh would supply a 12.8% internal rate of return. The tariff will escalate 5% annually for 10 years, which the firm says makes the low initial tariff possible.
Bridge to India concludes that this tariff means that solar power has reached commercial grid parity, as retail electricity rates for Indian consumers can reach as high as INR 10/kWh in some states.
Competitive bidding for only 1 GW of projects
The first 1 GW under Tamil Nadu's policy will be achieved through competitive bidding, with the remaining 500 MW driven by private power purchase agreements (PPAs) with power consumers who must fulfill solar purchase obligations.
The policy is targeting another 350 MW from rooftop PV plants, including 300 MW from the rooftops of government-owned buildings, and 50 MW from privately owned or domestic rooftops. Net metering will be available for these projects.
The remaining 1.15 GW will be added through renewable energy credit projects.
For more information, see http://www.bridgetoindia.com