Solar in India – Open Market and Private PPAs to be the next big revolution : L&T

Recently, I got the opportunity to have a fairly elaborate discussion with Larsen & Toubro(L&T) about the solar sector in India. It may be recalled that L&T was ranked as the top Indian Solar EPC company in the world 2012 by IHS Research.
This discussion/interview was done on behalf of Intersolar India and covered a range of topics including from policy(JNNSM and state policies), Regulations(RPO and REC), challenges and key learnings from the Indian Solar sector, Rooftop PV, Distributed Power Generation among others. (The full interview can be read at the Intersolar website here.)
One response from that I found particularly interesting was about the Open market. Here is the view of L&T on this subject.
“Apart from the regulated market, we also feel that the Open market is fast trying to catch up. A few of our recent clients are based out of REC based business model. Personally, we feel that with the cost of PV plummeting (thanks to the 60-70% drop in module prices alone during the last4 years) and the true cost of solar power accelerating towards grid parity, the open market is going to be the next big revolution where projects would be viable without any financial incentive or subsidies.
This is especially true in certain market segments like Commercial /Industrial consumers in the states of TN/AP and those who are significantly depended on diesel for back-up energy generation. Further driven by the impending diesel de-regulation, this trend is expected to grow and more projects are expected under the private PPA model and we are already seeing many of such projects realizing in the near future. 
However, there are still challenges in achieving financing of REC based projects on a non-recourse basis. The regulators and financial institutions should work towards eliminating this for the market to take-off and drive the investments to this segment.
If this view holds true, we can expect to see the REC based projects growing at an exponential rate and all the policy support becoming increasingly redundant.
PS: Another interview that I had done with L&T 2 years back can be accessed here. In this interview, L&T shares its experience about the rooftop PV system operational at their campus in Chennai since 2009.
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1 thought on “Solar in India – Open Market and Private PPAs to be the next big revolution : L&T”

  1. amarjeet singh

    sir, but already with oversupply of non solar RECs in the market the buy to sell ratio has reached 1 to 12, so the same might also be true for solar REC as proposed by you in growing market for private PPAs before the next revision of REC floor price being decided by CERC in 2017 and the dual pricing model discussed for solar REC for before and after 2017 solar RECs by CERC will also create confusion and disparity in the REC market. Hence as far as REC market is concern demand is the need the hour and if the Govt and Regulator are unable to do anything in this concern it will be failure with solar RECs also being trading at floor prices after 2017 like the power trading market which has also become stagnant over couple of years.

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