The Central Electricity Regulatory Commission(CERC) released the new benchmark capital cost for Solar PV plants on 25th October 2012. The cost has been reduced to Rs. 8 Crores/MW(~$1.5 Million/MW) for the year financial year(FY) 2013-14. In the not so distant past, i.e., for the FY 2009-10, the benchmark cost was Rs. 17 Crores/MW which represents an astonishing 53% drop during the period. The capital costs and the breakup as notified by CERC for the last few years are given below.(The cost breakup for FY 2009-10 is not available with us).
The corresponding levelised tariff for the year is given below.
As expected, PV module prices have dropped to a third of the base year(2010-11). Inverter prices also have dropped at a slightly higher rate. The other item to fall is the expense related to the services. What is interesting is the fact that the price of everything else(land, civil, electrical works, mounting structures) have gone up. The table below shows the share of each item as a percentage of the total capital cost.
The graph below sums it up quite well. The share of PV Modules and inverters together now is about 50%, down from 72% in 2010-11.
It is very unlikely that the system prices can reduce much further without compromising on the quality. As we had seen in one of the earlier blogs(available here), PV module price drops will stop and could even strengthen in another 2-3 quarters. The price of Balance of Systems(BOS), which are mostly commodities, have been increasing over the years and the trend is likely to continue.
The bottomline – achieving grid parity will now depend more on the increase in power tariffs and less on the drop in PV prices.
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