Renewable power tariff below Rs 5 to impact viability: Suzlon Chairman
Terming India as a "promising" market for renewable energy, Suzlon group Chairman Tulsi Tanti said the sector is "demanding" too, with tariffs going below Rs 5 per unit that can impact economic viability of companies.
Bhuj: Terming India as a "promising" market for renewable energy, Suzlon group Chairman Tulsi Tanti said the sector is "demanding" too, with tariffs going below Rs 5 per unit that can impact economic viability of companies.
The founder of India's leading wind turbine maker said there is some reluctance from banks to finance projects as there are fears that lower tariffs can lead to payment delays.
"Tariffs have to be at a level so that internal rate of return (IRR) is minimum 14 per cent and for that, I think tariff has to be a minimum Rs 5 per unit. There can be issues with the project's economic viability. They can become economically unviable," Tanti told reporters here.
His reply came in response to queries on declining tariffs in renewable energy (RE) projects -- solar and wind -- and their financial viability.
Suzlon has its rotor blades manufacturing facility in Bhuj and maintains sites for some of its clients.
"Lower IRR and profits can impact a utility's capability to make payments. Then, there is also the cost factor," he explained.
Experts say there are also issues related to grid integration and changing weather conditions that can lead to varying and unpredictable power generation.
Tanti, however, said the Indian market is "very promising and demanding" as government has a target of 175 GW of renewable energy by 2022, of which 60 GW is wind power.
"Indian market will continue to grow by 30 per cent," he noted, adding that to achieve such a huge target, the industry needs technology upgradation to counter lower tariffs and at the same time, grow generation capacity at a competitive cost.
Tanti is of the view that firms should invest in technological upgradation and go for cost optimisation to counter declining tariff impacting margins.
Explaining the rationale, he said: "Now the best sites are exhausted and we need to utilise low wind sites. We need to keep in mind the declining tariff. PPA tariffs are going below Rs 5.
Because of these two challenges, it is important for us to invest in technology to make projects viable."
He added: "That's why we have developed the S97 120 m wind turbine. S97 2.1 MW is the world's tallest all-steel hybrid tower with a hub-height of 120 m above ground level and has achieved a 35 percent plant load factor (PLF)."
It increases energy output by around 12-15 percent over other turbines of same capacity at a height of 90 m, he added.
The group has developed the S111 120-m hybrid tower which can have a PLF of almost 40 percent.
"So, we are investing in technology to increase power generation as well as utilise low wind sites so that our projects are economically viable even if tariffs go below Rs 5 per unit," he noted.
Suzlon has its research and development centres in Germany, Denmark, the Netherlands and India and has recently opened a Blade Science Center in Vejle in Denmark.
The Pune-headquartered group has installations of around 15.5 giga watt (GW) spread across 17 countries, of which India accounts for the lion's share of about 9.5 GW.