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Solar isn’t as complex as people make it out to be. Sunlight is free. There is the cost of solar panels, to get as much sunlight as possible. Simply called a photovoltaic system, which comes with its panel, inverter and battery. Lots of photovoltaic systems put together make an array. Multiple rows of arrays produce Direct Current (DC) which has to be converted into Alternating Current (AC), so there’s another largish inverter.

A company’s job is to put all of this together, sell electricity to someone—usually the state electricity board—and in turn, make money. Year after year. Until such a time, 15 or 25 years in, when the cost of putting all this together and maintaining it over the years becomes less than the total money received from the state electricity board. Then, you go home. And party. Pretty simple.

Of course, that is till the time you show up in India. And everything goes crazy.

Sample this. Earlier this year, Uttar Pradesh renegotiated the power purchase agreements (PPAs) it had signed with 15 developers for a 215 MW solar tender which was auctioned in 2015. The tariffs for this auction were in the range of Rs 7.02/kWh and Rs 8.60/kWh. The state then demanded the companies to agree to lower tariffs of Rs 7.02/kWh. Then again, followed by Uttar Pradesh, Tamil Nadu’s electricity distribution authority renegotiated the PPAs for a 1.5 GW solar tender. The tender was awarded to 18 companies but the state signed PPAs with only 16 of them—those which agreed to lower their original tariff to the lowest bid in the auction. In the second quarter of 2017, more than 3,000 MW of new tenders were announced, out of which, 2,100 MW of tenders were scrapped. For myriad reasons. Prime amongst them? High bid prices.

There’s more. Early this year, in May, India recorded one of the lowest solar tariffs in the world, when ACME Solar won with the lowest bid to develop a 200 MW project in Rajasthan, quoting a tariff of Rs 2.44/kWh. Needless to say, this price piqued the interest of many solar companies across the world. Hence, the interest of banks to lend huge sums to solar projects and private equity capital chasing developers. It’s another matter altogether that the price of solar modules—which are mainly imported into India from Taiwan and China—has been climbing. According to Mercom research, in Q3 2017, the price of Chinese solar modules grew by 14% compared to the same quarter the previous year.

Even as all this happens, India has added 7 GW of cumulative installations in the first nine months of 2017. This number is important because it makes solar the leading new energy source in India, accounting for 39% of total new power capacity additions in the first nine months of 2017.

More often than not, disparate sets of information muddle the true picture. A good case in point is India’s solar industry.


Sidhartha Shukla

In his earlier stint at Moneycontrol, the website owned by the Network18 group, Sid wrote on cryptocurrencies, cybersecurity, business, and finance. Born in Raipur, Chhattisgarh, Sid has spent most of his life in Jalandhar, Punjab. He has a BSc in Mathematics from St Xavier’s College, Mumbai. Sid is a comic book nerd and a big fan of Alan Moore, Neil Gaiman and Brian Azzarello. He can be reached at sidhartha at the rate

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