Solar power tariffs expected to fall to as low as Rs3.50 a unit in 3 years

Solar power tariffs in India, which have fallen below Rs.5 per unit since November, are expected to fall further as the industry doubles volumes every year and the cost of producing power continues to decline.

At least three industry experts Mint spoke to said that tariffs will fall to as low as Rs.3.5 per unit in three years owing to better use of technology, higher volumes, increased competition and a favourable regulatory environment.

“There is no question about whether they (tariffs) will go down or not. Typically we are seeing a 3-4% increase in efficiency and about 3-4% reduction in costs. So we expect that solar tariffs will continue to go down by 5-8% year-on-year,” said Vikram Kailas, managing director at renewable energy producer Mytrah Energy Ltd.

Solar module prices have already fallen sharply, down by 10% in the first half of 2016 , leading to higher margins and reviving projects which were termed unviable earlier, Mint reported on Monday.

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