CERC: Benchmark solar capital cost in India falls 28%

For the financial year 2016-17, CERC has calculated the capital cost for solar PV at INR 50.1 million/MW, or around US$0.76 million (see table below for a breakdown). This is down 17% on 2015-16 (INR 60.5 million/MW), which in turn saw a decline of 12% on 2014-15.

Cost

Capital cost proposed for FY 2016-17 (INR/MW)

% of total cost

Modules

31.05

61.9

Land

2.5

5

Civil and general works

3.5

7

Mounting structures

3.5

7

Inverters

3

6

Evacuation cost up to interconnection point (cables and transformers)

4

8

Preliminary and pre-operative expenses, incl. IDC and contingency

2.613

5.2

Total capital cost

50.132

100

According to Bridge to India, both the "significant" solar PV capacity added in China (a total of 17.8 GW of new installs were anticipated in 2015) and falling polysilicon costs account for the capital cost reduction. It adds that the coming year may also see a double-digit decline. This, it says, will make it difficult for the Indian Government, or other power off-takers, to offer fixed FITs.

Initially, based on its calculations, CERC set benchmark capital costs at NR 58.7 million/MW ($0.87 million) for this year; however, following industry feedback, it revised them to INR 60.6 million (USD 0.92 million). An initial tariff of INR 7.01/kWh has also been set. The final benchmark capital cost, and tariff, is expected on March 31, with industry input due by January 10.

Bridge to India believes a further increase may be seen, following industry input. It also foresees calls for a separate benchmark capital costs for projects utilizing domestic solar cells and modules, due to the "substantial cost difference between imported modules and domestically manufactured modules."

The consultancy firm adds that while the reduction in the benchmark capital cost over the past two years may seem "drastic," it is in line with bid tariffs over the period, with average tariffs in some states having fallen from INR 6.50 to INR 7/kWh, to INR 4.75 to INR 5/kWh.