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Solar power tariffs may touch 2.7 a unit: Crisil

According to Aditya Jhaver, director, CRISIL Ratings, an increase in tariffs envisaged in future bids may scare away state distribution companies and add to an already large capacity of 20 GW that has been bid-out but haven’t found a buyer for the electricity,Premium
According to Aditya Jhaver, director, CRISIL Ratings, an increase in tariffs envisaged in future bids may scare away state distribution companies and add to an already large capacity of 20 GW that has been bid-out but haven’t found a buyer for the electricity,

A higher GST is being levied on cells, modules and inverters from 1 Oct after the 45th GST council meeting held on 17 Sept recommended increasing the GST on ‘Specified Renewable Energy Devices and parts’ from 5% to 12%

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NEW DELHI : India’s solar power tariffs are expected to touch 2.6-2.7 per unit due to the increase in the goods and services tax (GST) on renewable energy equipment and a proposed customs duty on imported solar modules, according to Crisil Ratings.

A higher GST is being levied on cells, modules and inverters from 1 October after the 45th GST council meeting held on 17 September recommended increasing the GST on ‘Specified Renewable Energy Devices and parts’ from 5% to 12%.

This comes in the backdrop of solar tariffs firming up in the recent auctions rounds as compared to a record low of 1.99 per unit in December 2020. India’s solar tariffs are on an upswing due to factors such as higher commodity prices and a 40% basic customs duty on solar modules and 25% on solar cells to be imposed from April 2022. “The Government of India has increased the GST on critical components of a solar project such as photovoltaic cells and modules from 5% to 12% with effect from October 1, 2021. This has increased the total taxation on a solar project from 8-9% to 12-13%1. It will more than double to ~30% when customs duty of 40% on imported solar modules kicks in from April 1, 2022," Crisil Ratings said in a statement.

The spike in global conventional fuel prices such as crude oil, gas and coal is now playing out in the solar space with module prices touching 28 cent kilowatt-hour (kWh), the highest since 2019.

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