Home >Industry >Energy >India’s solar power tariffs remain competitive despite customs duty on equipment

New Delhi: In what augurs well for India’s green economy, solar tariffs discovered through the recent auctions remain competitive and below 3 per unit, despite the imposition of 40% basic customs duty (BCD) on solar modules and 25% on solar cells from 1 April next year, according to ICRA.

This also comes in the backdrop of high commodity prices playing out in these keenly contested auction rounds, with developers calibrating these new realities while placing bids.

“Tariff competitiveness offered by the solar and wind power projects in utility auction route continued to remain superior, with tariffs remaining below Rs. 3.0 per unit, despite the upward pressure arising from the imposition of customs duty on imported cells and modules, w.e.f. April 2022," ICRA said in a statement.

This assumes significance given that India is running the world’s largest clean energy programme, with the Indian government tightening curbs on Chinese solar power equipment firms, keeping on hold decisions to grant them permission to feature in the approved list of solar photovoltaic models and manufacturers as reported by Mint earlier. Being on the list is essential to do business in the world’s largest green energy market.

“Renewable energy sector outlook supported by strong project pipeline, superior tariff competitiveness and continued policy support," the statement added.

India’s electricity demand has been growing. In a reflection of revival of economic activity in the country, India’s peak electricity demand recorded an all time high of 200.57 giga watt (GW) on 7 July. Also, in a reaffirmation of India’s push for green energy sources, solar and wind generation recorded an all-time high of 43.1 GW on 27 July as compared to the previously recorded high of 41.1 GW on 11 June.

“The key challenges constraining the growth remain on execution front, mainly associated with land and transmission infrastructure as well as the slow but improving progress in signing of power purchase agreements and power sale agreements by intermediate procurers with state distribution utilities," the statement added.

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