The falling solar power tariffs should be welcomed—but it remains to be seen whether producers can deliver at those rates on a sustainable basis A new tariff war is playing out in the Indian solar power space. Tariffs plunged to a new low of Rs2.44 per kilowatt-hour (kWh) last week during an auction for 500 megawatt (MW) capacity at the Bhadla solar park in Rajasthan. Tariffs in the solar space have declined significantly over the years and have come down from levels in excess of Rs10 per kWh at the beginning of this decade to the present record lows, as capacity is being added at a record pace. According to Bridge to India, a consulting firm, new capacity addition in the solar space is likely to touch 8.8 gigawatt (GW) in 2017—an increase of 76% over 2016—which will make India the third biggest solar market in the world. While the falling tariffs should be welcomed—it will make India’s energy consumption mix more environment friendly—the changing dynamics of the power sector could pose several challenges.

Read more at www.livemint.com