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Solar Tariff at Less than INR 4.5: Reality or Myth?

News

CLP India, one of the largest foreign investors in the Indian power sector, has raised concerns about the sustainability of electricity tariffs being quoted by solar power developers.

Source: live mint

SNP Insight

Government is planning to provide solar power at less than INR 4.50 to the consumer by adding 100 GW solar power capacity by 2022. Business sentiment and response looks positive to achieve this target. But the over competition in solar market may push the companies to quote unrealistic bid for project. This may make the companies more vulnerable to risk with low, no or negative margin of return on investment. With bad financial condition of the distribution sector the risk factor in timely cash inflow to these projects may increase. If the balanced revenue cycle is not followed then these aggressively bided projects will face problem to service their debt in future. So, this may increase the risk of investor to these projects. Which may have negative impact on the investment scenario of clean energy sector.    

Source: SNP Infra Research