Domestic solar EPC prices plunge as global companies raise bar
Economic Times reported that a significant drop in global commodity prices and fierce competition among domestic cash-strapped power project contractors have led to a steep fall in prices of solar EPC ( engineering, procurement and construction) contracts, benefiting power asset owners and consumers.
Solar EPC prices plunge as global companies raise barEPC contractors are learnt to have quoted the lowest ever prices of around INR 5.6 crore a megawatt for solar power projects of NTPC in Rajasthan (260 MW) and Madhya Pradesh (250 MW) in the first-ever re verse auctions in the domestic content category.
The development comes at a time when global and domestic solar power developers have been aggressively participating in the auctions, pushing down solar pow er tariffs to the lowest-ever levels of INR 4.34 a unit in the latest auctions in Rajasthan.
Fortum Finnsurya, part of Finland's state-owned Fortum, emerged the lowest bidder in 420 MW of solar projects in the reverse auction by NTPC for its solar park in Rajasthan. The lowest tariff until now had been INR 4.63 a unit, offered by Sun Edison (500 MW) and SB Energy (350 MW) - the joint venture of Soft Bank, Foxconn and Bharti Airtel - in the open category for projects in Andhra Pradesh.
Solar power experts say the stage has been set for discovery of yet another competitive EPC price during the forthcoming reverse auction for 750 MW of NTPC's open-category project in Andhra Pradesh. With the open-category projects allowing use of cheaper imported cells and modules, they say the EPC prices may now see a new low of below Rs 5 crore a megawatt.
Mr Rajinder Kumar Kaura, national convenor of Solar Energy Society of India, said the costs of solar projects, both for developers and EPC players, were witnessing new competitive benchmarks owing to various factors that include the fall in global commodity prices, cheaper sourcing of imported cells and modules, and the large sizes of solar units in the reverse auctions.
According to Kameswara Rao, PwC partner, energy and utilities, the continued decline in solar tariffs was due to a combination of several factors. These include lower imported module prices and competitive interest from project developers.
Tendering agencies were also playing key role in shaving costs by offering larger projects, more secure contracts, and pre-developed facilities.
Mr Rao said that "Despite stiff competition, EPC contractors are benefiting from buoyant project activity and, with growing experience are delivering projects in shorter time. In fact, some are taking ownership positions now, albeit funded by global investment banks."
Mr Ashish Khanna, ED and CEO of Tata Power Solar Systems, an integrated solar power player into production of solar cells and modules, developer and EPC contractor, said that integrated players would have the advantage of cost optimisation of efficiencies that help them quote low tariffs and EPC bids. Finding no significant changes in input costs of solar cells and modules of late for solar prices to fall, he viewed that the aggressive price bids by domestic and foreign players could be based on certain assumptions on future trends of prices.
Source : Economic Times