Rupee’s fall has taken the sheen out of India’s renewable energy sector, especially the solar energy. Power producers, heavily dependent on imported solar modules, are at the receiving end. The timing of dollar becoming dearer couldn’t have been worse as the imposition of the safeguard duty on solar modules being bought from China and Malaysia has already hit several solar projects.
In January 2018, when solar project bidding was at a peak, rupee was hovering around Rs 63 vis-à-vis the US dollar. Now, it is expensive by more than Rs 10, thereby throwing project calculations off the grid.
The rating agency Crisil said nearly half of the solar power capacities under implementation worth Rs 28,000 crore faced viability risk because of the continuous fall in the rupee. These include 5.5 GW of projects bid out in the past nine months at very low tariffs of Rs 2.75 per unit or less. These projects, currently in the early phase of implementation, are unlikely to have bought solar modules, orders for which are typically placed 9-12 months after bids are won. Projects awarded during last one year may become unsustainable if the rupee continues to fall.
The government stares at the eventuality of re-tendering the projects to achieve its 100-GW target by 2022. If rupee remains unchanged or slips further, every solar project will see a jump in the per-unit rate.
