There has, of late, been talk of solar power tariffs falling and the imminence of ‘grid parity’. But in Madhya Pradesh, some solar power plants are selling electricity at tariffs below those of conventional electricity.
These plants, located in two solar parks created by the BSE-listed M and B Switchgears Ltd, sell power directly to large consumers at around Rs 4 a unit. The offer is at a 20 per cent discount to the tariff the local power utility charges consumers.
Solar power generators are generally registered to get ‘solar renewable energy certificates’, which can be sold in the market for cash. However, Vikalp Mundra, Director, M and B Switchgears, says that it works out profitable for solar plant owners even if 20 per cent of the RECs they acquire are sold in the market.
Depreciation benefit
This may sound fantastic, but it does works because those who own solar projects get also the ‘accelerated depreciation’ benefit — a fiscal incentive that allows them to write off the cost of the project as depreciation, saving on tax payment.
M and B Switchgears was set up in 1979 to manufacture transformers, but in the last couple of years, the company shifted focus to the solar business. Today, it mainly puts up large, modular solar projects and sells the plants to customers.
In Ragarh in Madhya Pradesh, the company has a 15 MW park, in which it owns 2 MW of assets — the rest are owned by other solar investors. Elsewhere in the State, it is putting up a 27 MW project, of which 13 MW of assets are operational and the rest will be by the end of August. M and B Switchgears will own 12 MW of the 27 MW, Mundra said.
Mundra told Business Line M and B Switchgears sells solar plants at around Rs 7.5 crore a MW, including land cost. The company promises investors generation of 1.5 million units per MW, and says the actual has been consistently higher.