Solar sunrise or sunset – fate of Gujarat solar power project industry

FOR IMMEDIATE RELEASE
Ahmedabad, Gujarat, India, Republic of (Free-Press-Release.com) January 25, 2012 -- Its 25th January not-so-cold Ahmedabad evening and I am sure people who are connected with Solar power project development in Gujarat are utmost desperate to hear news from GERC (Gujarat electricity Regulatory commission). Most desperate are three parties biting their nails awaiting final decision from GERC. These parties are,

One, a solar project developer from phase I or Phase II who have not made much of a progress on the ground and are not able to complete their project even on 28th January deadline of FIT control period. A developer who have filed for an extension of this control period to GERC, who have hired top-notch-highly-expensive lawyer to argue his case in GERC
Second, a GUVNL, who’s chief, in response to the project commissioning deadline extension appeal filed to the GERC by some project developers, has recently replied as “unconvincing reasons for delay”, likes to understand consequences of extra burden of payment incase deadline being extended for all projects

Third, in-waiting prospective 3rd phase solar PPA aspirants, waiting to find out if their IRR calculations makes sense with new Feed-in tariff. This tribe also includes Indian and international manufactures and EPC providers planning to set their presence in INDIA starting with Gujarat, having favorable business environment and bureaucracy for solar power project development.
Finally, this expectation will be over by 27th January evening. GERC should be delivering two details. Whether extension will be permitted for all developers or case to case basis or none? Second new FIT for control period from 29th January 2012 through 1st March 2015. If rumors are to be believed, new FIT will be near to Rs. 8/Kwh. While discussing about this with few top industry individuals, I hear huge cry as completely absent minded FIT which can get down entire Gujarat solar power project generation industry overnight.

Though my take is different, today most comprehensive calculation of per watt cost of solar PV Crystalline based Power generation cost comes close to Rs. 7.25/Kwh. Caveat here, we use cheapest, yet all certified Chinese/ Taiwan made modules, book all Copper in advance and have EPC team who can commission project on war-footing basis. No doubt this doesn’t make your IRR so lucrative what you have had yesterday but still for the long term return this can’t be ignored, if developer really wants to remain in the industry for long time or manufacturer wants to consume his own panels for his self sustaining in everyday declining module prices.
There are stories all around about trends going in the market about module prices. 50 billion dollar investment by government with 4% interest loan and 30% other subsidies for doing solar business in china have caused really big manufacturing base out there. Anyone can understand this price panic when your warehouses are full. But that is going to end with filing bankruptcies by these manufacturers with trend of vanishing FIT internationally and so module prices are poised to shoot up at the end of 2012.

But all in all, lower module prices, higher copper prices, higher land and labor cost still makes a case if FIT is enough to sustain the business, if not MW scale, government can look at rooftop with huge potential of net metering. Expect some in new announcement.

Let me conclude with final words on what’s what in Gujarat. As of this writing, nearly 300MW of solar PV power generation project has been commissioned so far in Gujarat. Considering final deadline of 28th January 2012 for FIT, Final inspections of some of late projects are going in full swing by department. The GERC already sympathized with developer by not attaching penalty with project that will be completed prior to 27th January. The fate of rest of 645 MW solar power project developers holds till 27th January evening. I see clearly a panic of selling PPA or completing project ASAP in those project-not-complete developers.

And so fate of solar power generation industry of Gujarat is attached with these remaining 645MW PPA holders.

Happy Republic Day to all

Nilesh Patel is project consultant for solar PV and Solar Thermal power generation. He owns business Movya consultancy dealing in project consultancy, government liaison, Allotment, signed PPA/ Equity trading and Land banking. He is also independent freelancer expresses his understanding of current issues alike in various national and international magazines and newspaper. If you have questions on above article or business please contact him on Nilesh@movya.com. For his business visit http://www.movya.com/

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