New Delhi
A CRISIL report released on Tuesday indicates that the steady decline in the price of solar modules since October 2022 is expected to boost the internal rate of return (IRR) of 45 GW utility-scale solar projects awarded since fiscal 2021. Consequently, solar capacity implementation is projected to reach its fastest annual pace of 16 GW during the current financial year. The report highlights that implementation had slowed in the previous fiscal years due to disruptions caused by the Covid-19 pandemic and challenges related to protecting the Great Indian Bustard bird. However, with falling module prices and the resolution of issues such as pandemic-related disruptions and clarity on the protection process for the Great Indian Bustard, execution is anticipated to accelerate by 2025-2026. The reversal of falling module prices in the last quarter of fiscal 2021, driven by higher prices of key raw materials, had impacted the returns’ profiles of projects auctioned in fiscals 2021 and 2022. The pandemic-related extension in commissioning dates provided relief to these projects, allowing developers to defer module purchases. With module prices now down 30% as of September 2023 compared to the average last fiscal, project IRRs may improve by 300-500 basis points to an average of 9%.
