GST may push up cost of solar power projects

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The goods and services tax may increase solar energy project costs by 12 per cent-18 per cent and generation costs by 40-50 paise per unit, some industry leaders said, although the government said the new taxation regime won’t have much of an impact on them.

However, officials said even if costs increase, it won’t affect project economics because the additional charges can be passed on to customers.

According to Economic Times, Ratul Puri, chairman, Hindustan Power Projects, said that following GST, solar projects will be about 18 per cent costlier on an average, while cost of generation would go up by around 20 per cent. We have estimated the incidence of GST to be around 23 per cent-25 per cent on various inputs for the segment.

Power, coal, renewable energy and mines minister Piyush Goyal had said earlier the GST rates would not have much impact on his sectors.

Sunil Jain, CEO at Hero Future Energies, said solar modules, which weren’t taxed earlier, will have an 18 per cent levy, while inverters – a major component in solar projects used to convert direct current into alternating current – would now be taxed at 28 per cent instead of zero. Taxes on cement and other materials have been increased, he added.
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