A sharp fall in solar module prices will help renewable energy producers, who have won solar projects at aggressive tariffs but are yet to procure equipment or start construction, leading to higher margins.
Costs of solar photovoltaic (PV) modules, a key component in setting up of solar plants, have been on a downward trend because of oversupply in China. Modules make up nearly 60% of a solar project’s cost. Lower costs could mean several of the projects, which were termed unviable for being won at aggressive tariffs, could now see better investor sentiment.
A number of companies including Fortum Oyj’s Indian unit, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd, RattanIndia Solar, Adani Green Energy Ltd, Orange Renewable, and Mahindra Renewables have recently won solar project awards in various states. Globally, module prices have already declined by as much as 10% since the first half of 2016.