Last month, Dubai has set a new World-record by announcing an 800 MW solar project, which will be used to generate electricity at only Rs 2.2 per unit (2.99 cents). Coming to the similar projects in India, the lowest quote has been from the Finnish company Fortum Energy for Rs 4.34 per unit. Solar-technology has been gaining popularity in the recent times with the advent of several climate change pacts, signed at global platforms. However, the increased costs of constructing such solar parks in India seems to be one of the downhills for developing countries.
The lowest bid in India has been of Rs 4.34 per unit, for constructing a 70MW project in Rajasthan. Though there are speculations that the cost per unit of this project may be reduced by some extent, it is very unlikely to expect that it will reach to the Dubai’s estimates of Rs 2.2 per unit. So, why is that difference when it comes to India?.
“We cannot compare the project estimates like-for-like with those of Dubai, as the costs and risk factors are completely different in India”, says Sujoy Ghosh, country head of India at First Solar. “If you compare, Dirham is much stronger than rupee against the US dollar. As a result, for every technological import you make from foreign countries will impact the total cost. In addition, the risk factors in India are high. Arranging for project land is burdensome, as most of the times it will involve evacuation”.
“Another important aspect is the difference in expectation of percentage of returns on the investments, which is less in Dubai when compared to what is followed in India. Indian businesses seek 18%-20% returns while, DEWA, the Electricity Board in Dubai seek only 10% returns on their investments”, Mr Ghosh added.
Chairman of the Renewable Energy College in Kolkata, Mr SP Gon Choudhury opined, “We can also look at this in another angle. The Sun ray’s are more intense in Dubai and a 1MW solar plant can generate 20 lakh units of power for them. But, in India the average is about 16 lakh units. Lower generation leads to lower capacity utilisation and higher cost of generation.”
Mr Choudhury added that even constructing solar parks in desserts like Rajasthan will not help, as again the costs of evacuation will add up to the total expenditure of the project.