Solar projects on the scrap heap in Rajasthan

Against a tide of generally positive solar development in India, disappointing news came out of Rajasthan today, as state-run lignite mining and power generating company NLC India has been forced to abandon plans for two utility-scale solar plants in the country. Plans to construct the plants came to a halt, as distribution companies in the state consider previously agreed rates for solar energy to be too high, as solar generation becomes cheaper.

NLC had been planning to develop four 65 MW solar plants in two states, and invited bids from EPC contractors. Two of the plants were to be built in Tamil Nadu and the other two were planned for Barsingsar in Rajasthan.

All of the projects were expected to be commissioned by the end of the financial year, with power purchase agreements already in place for the two projects in Tamil Nadu, which look as if they shall still go ahead.

But in Rajasthan, the state with the most installed solar in the country, the appetite for new solar seems to be diminishing, as the power distribution companies in the state have refused to cough up the originally agreed price for energy generated by solar. The Rajasthan Renewable Energy Corporation defended the decision, stating that solar tariffs higher than Rs 4 per kWh are not possible now in Rajasthan.

Although solar deployment and the industry’s progression in India is extremely encouraging, this set back in Rajasthan is a blow. After racing to become the state with the most solar installed in the country, its appetite for solar has flagged somewhat, leading to questions as to where the solar industry in Rajasthan will go from here.