The significant drop in solar power tariffs in the past few months is a reflection of huge pent-up demand in the system, according to Sunil Jain, CEO and ED of Hero Future Energies Ltd.

Speaking on the sidelines of a CII meet on rooftop solar projects here on Tuesday, Jain said, “I am keeping my fingers crossed. You may see a lower price offer in the latest bidding process, which is now under way at Bhadla in Rajasthan. This may see a new low once the reverse bidding process is completed.”

Over-bidding

For a 750 MW solar power project, the bidding process now under way has seen bids for over 8000 MW, that is bids are more than 10 times of what is on offer. This shows that investors and developers are keen to be part of projects that ensure proper returns, he said.

“I will not be surprised if the rates go below ₹3 per unit. Eventually, the prices may settle down at ₹2.80 or ₹2.90 per unit,” he said.

The lower prices have been aided by a number of factors, including drop in module rates globally, lower cost of funding, and the assured returns on investment.

Target doubled

This is also one of the reasons the government has doubled the solar parks target from 20 gigawatt to 40 GW, Jain said.

“In less than four years of operations, we have an installed capacity of 600 MWof renewable energy. This is expected to cross one GW by August 2017. In addition, we have installed 20 MW of rooftop solar thus far and planning to take this up to 60 MW. Another 35 MW is in pipeline,” Jain said.

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