Stuck Solar Projects May Take Off As Module Prices Drop Over 48% In 12 Months

Solar power projects that have been stuck are likely to take off in the coming months, led by a drop in solar module prices, according to experts.

The solar panel prices have declined by over 48% in the last one year due to surplus production in China and their inability to supply to Europe and the U.S. The prices have dropped to 13 cents per watt peak in December as compared with 25 cents/watt peak a year before.

Experts that NDTV Profit spoke with said that developers have placed solar panel orders from China to benefit from postponement of approved list of modules and manufacturers, or the ALMM.

“These projects will help developers to commission the projects, roughly around 15 GW capacity, that got stuck during and post-Covid period due to increase in commodity prices, making the projects unviable,” said Tanmoy Duari, chief executive officer of Axitec Energy India Pvt.

The drop in panel prices will reduce the debt service coverage ratio of these companies to 1.2 times, a drop of 35 basis points which will be positive in the near-term for developers, ICRA Ltd. said in a webinar on Thursday.

“The sharp decline in solar PV cell and module prices by 65% and 50%, respectively, over the past 12 months is leading to a healthy improvement in debt coverage metrics for the upcoming solar power projects,” ICRA said in a statement.

For a solar power project, with a bid tariff of Rs 2.5 per unit, and sourcing modules from domestic OEMs using imported PV cells, the average DSCR has improved by over 35 bps, it said.

“While this is a positive in the near-term, the developers would remain exposed to movement in imported solar PV cell and wafer prices, till the development of fully integrated module manufacturing units in India."

India's RE Capacity To Touch 170 GW In FY25

ICRA expects the installed renewable energy capacity in India to increase to about 170 GW by March 2025, from a level of 132 GW as of October this year, on the back of significant improvement in the tendering activity.

The government has already tendered 16 GW of RE capacity in FY24 so far and another 17 GW bids are underway by the central nodal agencies. “This is in line with the 50 GW annual bidding trajectory announced by the Government of India in March 2023,” ICRA said.

The share of RE plus large hydropower in the all-India electricity generation is likely to increase to 40% by 2030 from 23% in FY23. “However, given the intermittency associated with RE generation, the availability of round-the-clock supply from RE sources remains important," it said.

This can be made possible with wind and solar power projects complemented with energy storage system, ICRA said.