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August 3, 2013

REC Mechanism helped Solar Projects in MP to achieve Grid Parity...

 

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Evidencing the fact that the Solar Energy in India has almost reached the grid parity, some of the solar projects are able to sale the power at price which are lower than the conventional electricity.

It seems that the  imminence of "Grid Parity" is due to the decrease of capital cost  requirements of solar projects, introduction and effective implementation of Introduction of Renewable Energy Certificate (REC) Mechanism.

 

Madhya Pradesh based M & B Switchgears Ltd, has developed two solar parks in the state:

  • In Ragarh, the company has a 15 MW park, in which it owns 2 MW of assets — the rest are owned by other solar investors.
  • Elsewhere in the State, it is putting up a 27 MW project, of which 13 MW of assets are operational and the rest will be by the end of August. M and B Switchgears will own 12 MW.

From the some of the above mentioned projects. power is being sold directly to large consumers at a tariff which is as low as Rs. 4.0 per unit which is almost 20% lower than the tariff being offered by the state utilities. 

In addition to above, the solar power generators can be registered with the REC Registry and can avail REC which can be sold on the exchanges like Indian Electricity Exchange and Power Exchange of India.

According to the officials of the company, the financials of projects under this mechanism will be profitable for the investors even if only 20% of the RECs availed by them are sold in the market.

In addition to that, the solar project developer will also get the "Accelerated Depreciation Benefits" under the Income Tax act of India which allows the companies to write off the cost of the project as depreciation thereby significantly reduce the tax payments.

 

More literature on this...

http://www.thehindubusinessline.com/companies/at-rs-4-a-unit-solar-power-cheaper-than-grid-in-mp/article4978485.ece


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