Rajasthan Finalizes Solar Tariff for FY 14-15

Rajasthan Electricity Regulatory Commission (RERC) in its order dated 21st August 2014, has finalized solar tariff for FY 14-15. Earlier commission proposed a draft for the same and invited comments and suggestions, following which the commission has given the final order.

 

 

There is a discontinuity in the financial year wise tariff represented in the graph above, as there was no tariff approved by RERC for the year 2011-12.

Also it is visible that the tariff for the Solar PV has significantly reduced over the period. The reason behind such decline in tariff, is the reduction in the capital cost of the Solar PV projects,  from Rs. 13-14 crore per MW in 2010-11,  to approx. Rs. 7 crore/MW in 2014-15. Such reduction in capital cost is mainly due to reduction in the cost of Solar PV cells. The prices of the solar cells is expected to reduce further, as Finance Ministry has decided not to levy the Anti-Dumping duties on imported solar panels.

The RERC Solar Tariff order can be accessed here.

Our Previous Blog post on Rajasthan APPC can be read here.

Contributed By Dheeraj Babariya.

Reinstatement of Accelerated Depreciation benefit for wind and its impact on the Renewable Energy Industry

Earlier last month, when the Union Budget was presented, there was a mention of reinstatement of Accelerated Depreciation ( AD ) for Wind Energy generators, in the Hindi version of the budget, whereas it found no mention in the English version. This caused confusion in the RE industry circles. However, the government clarified that AD has indeed been brought back on wind investments.

Wind Power development in India started in the early 90s. As per Section 80(J) of Income Tax Act 1961, industries were allowed 80% depreciation on capital invested. Since then till 2012 (when the benefit was removed), Wind Power development and growth has always relied primarily on Accelerated Depreciation (AD).

New wind capacity additional peaked in 2011-12 at about 3,200 MW, falling sharply to 1,700 MW the next year as AD benefits were removed. The argument put forward at that time by policy makers was that wind industry had matured, and the focus needed to shift to solar. This fits well with the objectives of the National Solar Mission.

The decline in wind investment due to withdrawal of AD coincided with healthy growth of close to 60% in Solar Power in 2012-13 and 2013-14. The market momentum had definitely shifted in favor of Solar. Our analysis suggests that Wind AD market had an investing capital of close to 7300 crores. This shifted to Solar AD market which saw increase in investments worth Rs 7500 crores during 2012-13.

The new government has announced that it was reintroducing AD (80%) in 2014, much to the delight of Wind Power stakeholders. We believe that the investment momentum will shift again to wind due to more mature policies and attractive tariffs.

Wind tariff in recent years have become very attractive and are close to solar tariff in many states. In Rajasthan, Maharashtra and MP, tariff in the range of Rs. 5, whereas solar tariffs are generally in the range of Rs. 6, leaving a very small gap.

With this, there will certainly be a diversion in investments from Solar to Wind power in the times to come.

These can also be understood from the table and graph below.

The green dots represent the advantage to the sector.

 

MoP at odds with proposal of Commerce Ministry on imposing solar duties

Power minister Mr. Piyush Goyal has reportedly given a statement which goes against the proposal of Ministry of Commerce to impose solar duties on imported equipments. An article in Bloomberg says that as per Mr. Goyal, solar duties will undermine PM’s vision of fostering solar generation in the country. He adds that India currently doesn’t have adequate solar manufacturing capacity to catch up with national targets. India’s transport minister Mr. Nitin Gadkari also holds same views.

The decision must have brought a lot of cheer to lobby and industry associations striving hard against imposition of such duties. A background of the case is detailed below –

Background –

Directorate general of anti-dumping & allied duties (DGAD) under Ministry of commerce and Industry had recommended to impose steep anti-dumping duties on import of solar products like US, China, Malaysia, Taiwan etc. By such levy of duties, DGAD wants to secure favourable market condition for domestic solar manufacturing cos. The DGAD has recognized that despite huge potential of manufacturing, India has negligible capacity operational.  To bolster the fate of Indian solar equipment manufacturers, India had introduced DCR in NSM, but following a dispute with US at WTO, some other means to check dumping was required.

Although DGAD paid heed to complaints raised by Indian manufacturing association, many solar experts across India fear that imposing of such duties is going to adversely affect the growth of solar sector in India.  Intense lobbying against such a decision has been observed. MNRE is also voting against imposing anti-dumping duties.

It is expected that anti-dumping duties are going to make projects selected under open category of NSM also unviable. On the flip side, Indian manufacturing still lags on technological front and the quality of products domestically manufactured is inferior to their imported counterparts. Solar power developers argue that both quality and price is going to be affected if the Min. of Commerce & Industry favours levy of anti-dumping charges.

Recent media articles can be accessed –

PV Tech

Hindu Businessline 

Moneycontrol

Economic Times

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