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Solar power tariff plunges to record low in Tamil Nadu

According to reports, solar power tariff has hit an all-time low of `3.47 per unit in Tamil Nadu. The tariff has gone below `3 per unit in many states, but this is the first time that a prospective investor has bid so low in Tamil Nadu.

As Tangedco opened bids for installation of 1,500MW solar power parks for 2017-18 on Friday , Bengaluru-based Raasi Green Earth Energy bid at `3.47 per unit to set up a100MW project. This is a steep fall from `7.01per unit that was prevalent in the state in 2015-16.The tariff was hovering in the region of `4.5 per unit last year.

Tangedco has received bids for more than 3,400MW now.The Tamil Nadu Electricity Regulatory Commission (TNERC) has fixed a tariff of `4 per unit for this year.

The lowest solar power tariff in the country is `2.44 per unit in Rajasthan. But in all other states, either the land cost is cheap or land is being given by the state government or the discom itself.

“We will negotiate with other bidders to bring down their rates. Only those that match our conditions will be considered,” said a senior Tangedco official.

“NLC has bid for the entire capacity of 1,500MW . After the lowest bid was known, NLC has expressed its willingness to match it. They propose to set up the park in land reclaimed from mines,” said the official.Rassi Green is headed by G Narasimhan, a former TMC MP from Krishnagiri constituency . “We came to know that our bid is the lowest. We plan to set up 100MW capacity at Paramakudi in Ramanthapuram district, where we have land,” Narasimhan told TOI.

Apart from acquiring land, the companies face problems in sourcing funds from banks and financial institutions because of high cost of funding.”Funds are available for solar projects in foreign countries at 4% to 5%. In India, it is 9%. Only the State Bank lowered the interest rate recently to 8%,” said Narasimhan, who also heads the Solar Power Companies’ Association.With the introduction of GST, the cost of setting up solar power projects is set to increase.

“GST rate is 5% for solar modules. It sounds reasonable and consistent. But it was 0% earlier. The GST for engineering and construction services is fixed at 3%. The impact on investments is still not clear.Our current estimate is that the total project capital cost may rise by about 4%,” said a power expert.

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