India investors may be turning from coal to solar

• 8 years ago (2016-03-21)
• David Flin

Renewables 776

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The Economic Times of India is reporting a shift from investors in power infrastructure in India away from greenfield thermal power plants and are looking towards solar energy. Installation and generation costs have risen for thermal plants following increases in coal prices and stricter pollution requirements, with the likelihood that these trends will continue. There is also uncertainty over coal availability, and distribution companies have been reluctant to announce power purchase agreements.

By contrast, solar power installation and generation costs are expected to fall. Salil Garg, Director of India Ratings & Research, said: “With solar turning out to be a viable option, ultra-mega power projects might not attract enough interest from private players. Banks are reluctant to lend for thermal power projects while most private players have shelved new project plans. They are diverting money into solar power projects.”

Solar power tariffs hit a low of Rs 4.34 per unit at a recent project auction, and look set to fall further, with a reduction in capital costs and access to competitive funding, according to India Ratings. Currently, a megawatt of thermal power requires an investment of Rs 6.3-6.5 crore ($1.01-1.04 million) against Rs 5.5-5.7 crore ($0.88-0.91 million) for solar.