Is L&T setting a new benchmark in solar EPC prices? Recently, the company said that it has bagged orders for putting up projects worth 10 MW for Rs 125 crore—Rs 12.5 crore per MW.

L&T does not own solar plants but is a leading player in putting up plants for others on turnkey basis. It currently has an order backlog of Rs 350 crore.

This comes at a time when Rs 9 crore per MW has come to be viewed as a benchmark for the industry, with expectations for further decrease in costs.

For instance, rating agency Crisil has said that it expects the pace of decline in module prices to slow down in 2012. It said that “capital costs are expected to decline only 10-13 per cent (emphasis added) to Rs 8.70 crore from Rs 9 crore per MW in 2012.”

Asked about this, Mr Shaji John, Chief – Solar Initiatives, Larsen & Toubro Ltd, said that the price of Rs 12.5 crore per MW is a “culmination of scope, specifications, terms and conditions.”

He said that due to non-disclosure agreements, L&T could not divulge the names of the customers or the project specifications.

“However, to just give an example, if we use trackers with high efficiency modules, the cost goes up significantly but also improves the generation that helps the developers’ financials,” Mr John said.

The higher per MW prices secured by L&T “indicates that the market is maturing and discerning customers are not averse to paying a higher price for better life-cycle cost advantages,” says Mr Vineeth Vijayaraghavan, Founder and Editor, Panchabuta, a renewable energy newsletter.

>mramesh@thehindu.co.in

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