India’s largest solar program cut the preferential rate it pays utilities for sun power as much as 33 percent as global prices of panels declined by more than half.
Photovoltaic plants commissioned after the Jan. 28 deadline will be paid a rate of 9.98 rupees (20 cents) per kilowatt-hour for the first 12 years, compared with 15 rupees for those finished on time, the Gujarat Electricity Regulatory Commission said in a tariff order on its website. The rate will be reduced to 7 rupees per kilowatt-hour for the next 13 years.
India joins governments in Europe that are cutting clean- energy subsidies as equipment costs plunge. Panel prices fell 51 percent last year after the 10 largest manufacturers doubled production capacity, according to data compiled by Bloomberg.
“The projects that missed the deadline will still be able to make money but not as much as they would have,” said Anmol Jaggi, director of Gensol Consultants Pvt., which advises project developers. Banks will be more cautious about lending to those facing the reduced tariff, he said.
Essar Energy Plc (ESSR) and MEMC Electronic Materials Inc. (WFR)’s SunEdison unit didn’t respond to e-mails and phone calls asking whether their projects were completed on time. Companies that finished their projects by Jan. 28 include Lanco Infratech Ltd. (LANCI), Tata Power Co. (TPWR), GMR Infrastructure Ltd. (GMRI), Azure Power India Pvt. and Green Infra Ltd.
The Gujarat Renewable Energy Development Agency didn’t respond to e-mails and phone calls requesting details on how many projects missed the deadline. Less than half of the 958 megawatts of capacity finished on time, Gensol’s Jaggi estimated.
Of the 958 megawatts of capacity, Gujarat issued contracts for 25 megawatts of projects using solar-thermal technology where steam is produced from sunlight for conventional turbines. Photovoltaic technology uses panels that convert sunlight directly into electricity.
The regulator raised the rate for solar-thermal projects and fixed it for 25 years to give them more certainty after one developer was unable to raise bank loans after 11 months, according to the tariff order. These projects will now be paid 11.55 rupees per kilowatt-hour that won’t be reduced from 11 rupees to 4 rupees per kilowatt-hour after 12 years as planned earlier, it said.
The rate paid to photovoltaic plants will be lowered 7 percent annually from the 9.28 rupees for each year that their completion is delayed after March 31, 2013, it said.