Supported by drop in capital and interest costs, solar power tariffs are likely to stabilise at about Rs 4.7-5 per unit in the near-term, says a report.
The Kotak Institutional Equities report said: "The tariff will also be dependent on the state and location (with lower or higher than average radiation), off-takers (NTPC or SEBs) and land acquisition and evacuation risks. At the recent 500 MW bid at Pavagada Solar Park in Tumakuru, Karnataka, these variables were at work (see details overleaf)."
Most companies, it said further, have steadily shifted gears from wind to solar led by the government's strong thrust on solar power and reducing capex for it, stable and linear radiation patterns compared to those of wind, lack of locational constraints unlike wind.
"Companies pointed out that recent state policies or FIT (feed-in tariff)...Reflected their antipathy to wind versus solar energy and key incentives AD (accelerated depreciation) and GBI (Generation Based Incentives) expiring in FY 2017 could lead to a downward spiral for wind installations from FY 2018," it said.
Power and Coal Minister Piyush Goyal had earlier in the year said that government is set to realise Prime Minister Narendra Modi's clean energy vision, with solar power tariff hitting a record low Rs 4.34 a unit.
