The fall in solar prices is not only good news in India

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solar-panels-india-modiLow solar energy prices should have been a boon for India, which wants to reduce its dependence on highly polluting coal, but their levels have plummeted so much that they are now threatening investment.
“Prices are too low, too early and it does not bode well for the overall health of the sector,” says Vinay Rustagi, director of the consultancy firm in renewable energy Bridge to India.
Third polluter of the planet, with 4% of emissions, India is engaged in a vast effort of development of renewable energies. New Delhi pledged to COP21 to reduce its carbon intensity by 35% by 2030 compared to 2005.
To offset the country’s dependence on coal, The government of the Hindu nationalist Narendra Modi bet on solar energy. It has set itself the ambitious goal of increasing its solar production to 100 gigawatts by 2022, a multiplication by more than eight of its current capacities.
So far, the solar is advancing at the speed of light. In less than a year, between March 2016 and March 2017, India has almost doubled its photovoltaic capacity.
But lower solar panel costs, cheaper financing and aggressive competition have caused heavily lower solar prices and sent a shock wave to the area. Electricity suppliers are under intense pressure from their customers, both private and public, to follow the new tariffs.
Last month, A supplier won a contract with the Indian authorities by offering the kilowatt hour (kWh) to 2.44 rupees (about 3 euro cents). This price is among the lowest in the world and one fifth of its level at the beginning of the decade.
The Minister of Renewable Energies Piyush Goyal hailed this as a step towards “a green future” but the specialized companies find themselves in uncertainty.
– ‘Hazardous’ –
“In the last 17 months, prices have fallen by almost 50% and this leads buyers to feel remorse for projects already built or developing,” says Vinay Rustagi.
States such as Jharkhand, Andhra Pradesh and Haryana have recently refused to buy ” Solar electricity at prices between 4 and 5.50 rupees per kWh, yet agreed during downward auctions over the past year, hoping to find cheaper elsewhere.
“Ethically, we should not do that,” said Sanjay Sharma, an official of the state-owned Solar Energy Corporation of India.
The government could “lose the trust of the foreign supplier who invests in India,” he fears.
Of the 329 gigawatts of electricity capacity in India, 67% comes from coal and gas. The rest is divided between nuclear and renewable energies such as wind, solar or hydroelectric.
Experts also question whether the recipients of the new contracts will be able to supply electricity at such low prices while having a viable business model.
Founder of Amplus Solar, Sanjeev Aggarwal was bombarded with emails from customers asking him to lower his prices to get to the level of the market. “People throw themselves on top of each other to get a share of the pie, but the question is can they afford to provide those rates?” He told AFP.
Sumant Sinha, CEO of ReNew Power, predicts a “curse of the winners”. “Extremely low tariffs do not help anyone. In the end, (companies) will have to go into debt, banks will have to come into play.