Finance worries may cloud solar projects

- Advertisement -
- Advertisement -

The second round of National Solar Mission, which has seen the lowest of the low tariffs, could soon face financing hurdles. The 350 megawatts of solar power saw bids as low as little less than Rs 8 a unit. That is around 33 per cent lower than the current average solar power tariffs of around Rs 12 per unit, says a Business Standard report.

Banks, which are already wary of lending to the power sector, are becoming more cautious with these projects. “I think these bids are aggressive to the extent that they might affect the long-term viability of these projects,” says B K Batra, executive director of IDBI Bank. “But developers might have made their calculations, we will have to see on what basis they were made.”

Sector experts say tariffs like Rs 7.50 per unit and Rs 7.9 could render these projects non viable if these projects were to get financing at current domestic rates of around 13 per cent.

- Advertisement -

“With non recourse rupee financing of debt, it will be challenging to achieve these tariff numbers and deliver a reasonable return to the equity investor,” notes Debashish Mishra, senior director of accounting firm Deloitte Touche Tomatsu.

The first round of the same auctions, which took place a year back, have not seen financial closures. Banking sources say that only those projects, which leveraged their balance sheet to get financing, have achieved financial closure. Many projects that were by smaller developers have neither raised debt nor progressed. This time around, however, saw some bigger groups participate like Mahindra Solar, Welspun group, and private equity backed companies like Azure Power and Kiran Energy Solar.

For solar power, banks also seek high equity contribution from promoters, which is around 40 per cent of the project cost. “Solar projects are different,” says Batra. “They depend on the location, intensity of irradiation, technology, capacity utilisation and power output.” The capacity utilisation for solar thermal projects is around 19 per cent, while that of solar photovoltaic projects is around 23 per cent.

- Advertisement -

Related Artcles

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Captcha verification failed!
CAPTCHA user score failed. Please contact us!

Exclusive

“Our Goal is to Offer 1000 To 1500 Varieties, With Volumes Ranging From 10000...

0
During a chat with Nitisha Dubey from EFY, Mohammed Iqbal, CEO of Technomake Electronics Pvt Ltd, talks about PCB assembly and major customer focus...

India, China Grow Amid First Global Cellular IoT Module Shipments Annual Decline

0
Several companies started local manufacturing in India. 4G Cat 1 bis emerged as the fastest-growing segment. Around 12% of the modules shipped in...

“More Chargers Provide Security And Confidence To Customers, Encouraging EV Adoption”

0
With an agenda to transform the EV industry, EarthtronEV has established 250+ charging stations on major highways across India. The company aims to interconnect...

Buzz

TSMC

SmartSoC To Provide Chip Design Services Through TSMC’s Design Alliance

0
SmartSoC solutions will provide chip design services and system-level solutions, making it easier for customers to adopt TSMC's technology. Chip design services provider SmartSoC Solutions...

Montra Electric Boosts Amritsar’s Green Mobility with RAAHI Project

0
The initiative is a component of the City Investments to Innovate, Integrate, and Sustain (CITIIS) program, which falls under the auspices of the Ministry...

BYD Delays Vietnam EV Factory Plans

0
Vietnam's government announced in May that BYD plans to construct a facility for manufacturing and assembling electric cars in Phu Tho, a northern Vietnamese...

Important Sectors

Microchip Technology Expands TrustFLEX Family With CEC1736 Real-Time Platform Root Of Trust Devices

0
TrustFLEX devices along with the Trust Platform Design Suite tool will simplify the enablement of root of trust from concept to production in wide...
TSMC

SmartSoC To Provide Chip Design Services Through TSMC’s Design Alliance

0
SmartSoC solutions will provide chip design services and system-level solutions, making it easier for customers to adopt TSMC's technology. Chip design services provider SmartSoC Solutions...

India, China Grow Amid First Global Cellular IoT Module Shipments Annual Decline

0
Several companies started local manufacturing in India. 4G Cat 1 bis emerged as the fastest-growing segment. Around 12% of the modules shipped in...

Montra Electric Boosts Amritsar’s Green Mobility with RAAHI Project

0
The initiative is a component of the City Investments to Innovate, Integrate, and Sustain (CITIIS) program, which falls under the auspices of the Ministry...

BYD Delays Vietnam EV Factory Plans

0
Vietnam's government announced in May that BYD plans to construct a facility for manufacturing and assembling electric cars in Phu Tho, a northern Vietnamese...

Manufacturing

BYD Delays Vietnam EV Factory Plans

0
Vietnam's government announced in May that BYD plans to construct a facility for manufacturing and assembling electric cars in Phu Tho, a northern Vietnamese...

JLR To Hire 250 Electrical Technicians For Future EVs

0
These new roles, part of a £15 billion investment, are in addition to 300 positions created last year by the British car maker. Jaguar Land...

Altmin India Partners With WMG To Advance Battery Tech

0
Altmin and WMG will collaborate to strengthen their global battery materials supply chain position by optimizing cathode materials and developing diverse cell designs across...

EVs To Cost Less Than Gas Vehicles by 2027, Says Gartner

0
Gartner predicts a faster decline in production costs compared to battery costs, which represent the most significant expense in an electric vehicle, accounting for...
MG

MG Motor To Set Up Battery Assembly Unit At Halol Facility

0
The company plans to investigate battery cell production in collaboration with external partners. Automaker MG Motor India is actively exploring the possibility of assembling and...