Solar projects could be clouded by Finance problems

The second round if the National Solar Mission, which has seen the lowest of the low tariffs, could soon face financing hurdles. The 350 MW of solar power saw birds as low as little than Rs.8 a unit. That is about 33% lower than the current average solar power tariffs of close to Rs. 12 per unit. Banks, which are already wary of lending t

o the power sector, are becoming more cautious with these projects. "I think these bids are aggressive to the extent that they might affect the long-term viability of these projects", says B K Batra, executive director of IDBI Bank. "But, developers might have made their calculations; we will have to see on what basis they were made". Sector experts say tariffs like Rs. 7.50 per unit and Rs. 7.9 could render these projects unviable if they were to get financing at current domestic rates of about 13%. "With non-recourse rupee financing of dept, it will be changing to achieve these tariff numbers and deliver a reasonable return to the equality investor", notes Debashish Mishra, senior director of accounting from Deloitte Touché Tomatsu.

Source: Terra Green