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Web Exclusive | February 2013

Solar developers suffer high equipment cost

Reports indicate that companies that secured solar power projects from the government's Jawahar Lal Nehru National Solar Mission (JNNSM) are finding the cost of equipment to be higher than the cost of the project.

As a result many of these firms may be looking for an exit, reports indicate. These firms have bid aggressively under the plan in a desperate move to secure solar power projects.

Besides rising equipment cost, solar power developers are also having difficulty in achieving financial closure, reports suggest.

It is learnt that at the time of bidding, equipment prices were falling and companies that bid aggressively thought the price of modules would continue to fall. However, now the price has reached a plateau affecting plans of some of these companies.

As of January 16, around 20 mw projects have been commissioned in Rajasthan by two companies —Green Infra, an IDFC PE-funded company that has commissioned 10 mw project and Fonroche Raajhans (a JV between France-based Fonroche and Mumbai-based PR Clean Energy) that commissioned two 5 mw each plants, data from the National Solar Mission website shows.

Around 320 mw worth of projects were awarded through the mission by the government in 2011 under phase 1, tranche II. In The phase I, tranche I, around 10 MW is still pending out of 98.5 mw that was allotted, according to the website.

Some industry sources feel that companies that the sector is still evolving and the domestic banks are not willing to offer loans to companies setting up project in solar sector.

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