Declining solar power tariffs have resulted in fewer clean energy deals because of concerns that electricity offtake commitments at higher tariffs may not be honored.
According to Livemint, deal makers and experts say that the proposed transactions for the solar projects with high tariffs are increasingly being put on a back burner in the backdrop of record low tarrifs of Rs2.44 per unit recorded last week at Bhadla in Rajasthan. This is due to concerns over whether the electricity distribution companies (discoms) will honour their commitments for projects earlier awarded at high tariffs and not waver on signing power purchase agreements (PPAs).
Solar power tariffs have declined sharply because of plunging prices of solar modules. Also, overseas developers with deep pockets have made a bet on the Indian solar space driven by its scale and their own outlook of a benign interest rate regime.
Driven by the government’s ambitions for a green economy, India’s solar power generation capacity has more than tripled to 10,000MW from 2,650MW as of 26 May 2014.
