16 May 2018
India came down 2 spots in a year & is now ranked 4th in RE country attractive index, trailing China, US & Germany. A report by EY attributed ultra-low wind & solar power tariffs discovered in the latest auctions, coupled with uncertainties related to proposed import duties on solar components, as the main reasons behind the RE sector losing its sheen. The index had ranked India at third & second position in 2016 & 2017, respectively. The report said, “Disputes b/w developers & distribution CoS are raising investor concerns.” The lowest solar tariff ever in India was Rs 2.44/ unit, discovered in May 2017 at the reverse auctions for solar plants in Rajasthan’s Bhadla, while the lowest wind tariff currently is `2.43/unit for generating units in Gujarat. The report said the aggressively low bids now seem unsustainable as rising interest rates & the end of quantitative easing are set to raise the cost & reduce the flow of cheap capital. The country’s RE capacity stands at 69,685 MW at the end of FY18. The target is to achieve 1,75,000 MW by FY22. As FE recently reported, the threat of safeguard & import duties on solar panels has had a dampening effect on bidders for new projects, with Maharashtra postponing & Gujarat cancelling solar auctions. Similarly, Karnataka’s invitation for 1,200 MW at the Pavagada Solar Park received tenders for only 550 MW.