Shadows of thermal power gloom loom over solar industry

A day before bids for a solar park in Andhra Pradesh closed, executives at a foreign investor-backed company found it hard to conceal their excitement. After a go-ahead from the bosses to go “aggressive” and a lot of number crunching, they reduced their bid to below Rs 5 a unit. What were the chances they wouldn’t win? They didn’t. US-based SunEdison bagged the project, quoting the lowest-ever bid of Rs 4.63 a unit.
India’s solar energy sector has seen record capacity addition and tariffs bid for new projects have fallen to unprecedented levels. But is the “sunrise industry” at risk of repeating the mistakes of the thermal power industry? While solar power developers are bidding aggressively, they’re not leaving enough room for cost escalation, threatening the viability of projects. As the sector adds generation capacity, transmission infrastructure isn’t expanding as quickly.

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