Solar FiT in Tamil Nadu seen to fall to lowest in India

Dec 11, 2012 - The feed-in tariff (FiT) for utility-scale capacity to be allocated in the southern Indian state of Tamil Nadu is forecast to fall to INR 6.2 (USD 0.11/EUR 0.09) per kWh, the lowest ever in the Indian market, according to Bridge to India.

Tamil Nadu is the seventh of India's 28 states that have unveiled official solar goals, the solar market consultancy said. It is aiming to add 3 GW, of which 1.5 GW of utility-scale installations, by 2015. A total of 1 GW of utility scale capacity is to be awarded via a reverse competitive bidding process, with the solar power generated to be bought by the state distribution company, TANGEDCO, at a preferential FiT.

Bridge to India said that according to its financial model, for a 12.8% internal rate of return, the tariff for these 1 GW of projects was expected to be INR 6.2 per kWh. This is below India's lowest tariff under the reverse bidding mechanism so far, namely the INR 7 per kWh for 25 MW of projects in Odisha in February this year.

The consultancy also said that such a low tariff was viable thanks to the 5% annual escalation of the FiT for the first 10 years of the power purchase agreement (PPA). The tariff will stay at its 10th-year level for the remainder of the PPA.

(INR 100 = USD 1.842/EUR 1.418)

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