Developing solar in India: It is not just about costs per Wattpeak



The Indian PV market is among the fastest growing markets in the world. No wonder, it is a natural market with an abundant amount of sunshine. Various States have started programs to stimulate PV applications. Most popular are the tenders for bigger power plants. Now the State of Andhra Pradesh received solar bids totalling 418 MW. Developers will sign a 20-year power purchase agreement (PPA) with the Andhra Pradesh utilities for 6.49 INR, currently around $0,10/kWh.

The striking thing is that recently (early June) it was published that - under Phase II, Batch I of the JNNSM - the Indian government launched the Viability Gap Fund (VGF) mechanism that pays developers a fixed tariff of 5.45 INR per kWh for 25 years, which was said at that time to be around $0,10/kWh...In other words, in one month the INR dropped 16% against the Dollar. The VGF is questioned for other reasons as well. Interest rates in India are substantially high too.

KEY TAKEAWAY: The financial risks of PV project development are a bigger challenge than technology.

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