Lower Solar Tariffs Leading To Declining Solar Project QualityPosted by Shweta Pokhriyal on October 4th, 2019 Are lower tariffs affecting solar power plant qualityThe introduction of National Solar Mission in 2010 induced confidence among investors about solar project quality. The gradual increase in the scale and size of solar power projects in India attracted large global and domestic players towards Indian solar market. Now India is fast moving towards its target of 100 GW of installed solar capacity by 2022. According to a Mercom India research report, India Remained the third largest solar market after China & the US in Q1 2019. However, the increase in competition among developers and adoption of the competitive bidding framework for the allocation of solar power projects has led to a significant decline in the solar tariff levels. So much so that solar power has now become cheaper than thermal power in the country. The Present ScenarioIn recent years, the reduced tariffs have also led to increased number of solar power plant installations, but it has also raised concerns over the long term viability of these projects. The current trend of competitive bidding & constantly falling tariffs has brought about a price war and has reduced project developer margins, compelling them to reduce costs in various areas, leading to compromise in project quality that can be seen in installations across the country. The lack of regulations for product quality certification, intense competition, and absence of requisite awareness has only emboldened the problem. Studies & RevelationsPI berlin team with support from of Solar Energy Corporation of India (SECI) and KFW, in cooperation with the Ministry of New and Renewable Energy (MNRE) and the National Institute for Solar Energy (NISE) in India, surveyed six projects installed in recent years. The team visited two rooftop and six ground mounted projects. On the basis of their observation, they raised serious concerns over project development in one of the world’s biggest and cheapest solar market. They also found no EPC or O&M contracts on the rooftop projects and negligible warranty requirements on the larger schemes – with a legal gap on one project, after the main EPC contractor had gone bankrupt. It has also been observed that no specific certifications beyond IEC (International Electrotechnical Commission) certifications has been requested by owners. Even SECI never emphasized on asking companies for other certifications to apply for projects. They also raised question on validation of tender compliances as it was observed that commissioning certificate was issued even when a part of tender requirement was not fulfilled. This year we have observed various cases in Odisha where cyclone Fani damaged rooftop and ground mounted projects. Some solar power projects in Rajasthan and Tamil Nadu has also faced similar consequences. Module mounting structure need to be customized as per the topography of the land, module design, and the climate of the region. They are also expected to have excellent electrical and thermal conductivity apart from being corrosion resistant and durable. The current trend of constantly falling tariffs has brought about a price war that has pressurised EPCs to reduce the cost of the project. “Unless the industry reacts quickly and self-corrects, we are going to see unnecessary regulations put in place, further burdening the industry. Insurance costs will also go up if mounting structures start to fail,” said Prabhu. What we can concludeIndia has set an ambitious clean energy target of 175GW by 2022. Of this, 100GW is to come from solar projects. Overall, the solar power goals of the Government are commendable and capacity addition in recent years has been impressive. Lower tariffs are no doubt welcome, however, not at the cost of long term development of a healthy and efficient solar power sector that sustains better economies of scale. The government must lay down strict technical standards for components, failure-free installation, and construction. Like it? Share it! |