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Policy & Politics

Published on March 30th, 2015 | by Anand Upadhyay

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India Eyes Dollar Power To Cut Solar Tariff

March 30th, 2015 by  


India’s Ministry of New and Renewable Energy has asked all Indian states to come up with their own state level policy and targets, as part of the country’s efforts to increase its solar power installations.

In a written reply to a question in India’s parliament, the minister for power, coal, and renewable energy, Piyush Goyal, stated that 14 states have so far issued solar policies, and that a draft policy has been sent to all states to offer guidance on how to meet clean energy targets.Make in India logo with a backdrop of solar panels (Source)

In related interesting news, the Economic Times reported that the Ministry of New and Renewable Energy (MNRE) has been toying with an idea to take advantage of hedging over long-term US dollar-rupee exchange rate outlook to reduce solar tariffs.

In what is said to be a brainchild of Goyal, an experienced investment banker, India may direct its distribution companies (discoms) to adopt US dollar-denominated tariff bidding in their tenders. The discoms would quote their price in dollars, while tying up solar power for 25-year contracts, but charge the consumers in Indian Rupee.

As per the report, this could reduce the solar tariff to about ₹4.5/kWh. This would potentially make solar comparable to the electricity output from gas fired power plants in India (still a bit more expensive than the coal fired ones) and make it easier for discoms to sell directly, or bundle with supplies from conventional sources.

While the plan is still said to be at the drawing boards, once implemented, it would give a strong push to the solar sector.

Goyal also revealed that India and the US have agreed on a number of initiatives which were discussed during US President Obama’s visit to India in January. These include the setting up of an “Innovative Finance Forum”, establishment of “PACESetter Fund” to support innovative clean energy access project, and expansion of the current “Partnership to Advance Clean Energy” (both Research and Development).

By the end of February, grid connected solar power in India had risen to 3.38 GW while the total grid connected renewable energy installations (excluding large hydro) had reached 34.35 GW.

Sometime back, India had released a list of commitments from Indian banks and financial institutions (FIs) to invest $57 billion in green energy projects.


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About the Author

is an Associate Fellow with The Energy and Resources Institute (TERI, New Delhi) - an independent, not-for-profit research institute focused on energy, environment, and sustainable development. Anand follows the Indian solar market at @indiasolarpost. He also writes at SolarMarket.IN. Views and opinion if any, are his own.



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