Lok Sabha Question No. 816 (UNSTARRED), answered on 2016-04-28
Subject: New CAPEX for Solar PV Plants
Ministry: NEW AND RENEWABLE ENERGY
Asked by: FEROZE VARUN GANDHI

## GOVERNMENT OF INDIA MINISTRY OF NEW AND RENEWABLE ENERGY

## LOK SABHA

## UNSTARRED QUESTION NO. 816

TO BE ANSWERED ON 28.04.2016

## NEW CAPEX FOR SOLAR PV PLANTS

## 816. SHRI FEROZE VARUN GANDHI:

Will the Minister of New and Renewable Energy be pleased to state:

- (a) whether  while  determining  the  new  CAPEX  for  Solar  PV  plants  for  financial  year 2016-17, the Central Electricity Regulatory Commission (CERC) has assumed that module prices, land and mounting structures cost will remain the same;
- (b) if so, the details thereof and reasons therefor;
- (c) the  manner  in  which  the  CERC  manage  the  cost  system  as  a  result  of  increase  of module prices in lieu of the lower level of domestication of solar PV modules and further contention in WTO;
- (d) the State-wise details of the land chosen to introduce and implement these projects for the solar energy production;
- (e) whether in lieu of increased import of steel, the CERC has assumed that the cost of mounting structures will not vary and the backup cost has been set aside in case of increase in the cost;
- (f) if so, the details thereof; and
- (g) the extent to which this cost Fluctuation may eventually result in stalling of projects and  increase  in  the  cost  of  project  and  details  of  safeguards  put  in  place  to  ensure  that eventually projects do not run into losses?

## ANSWER

THE MINISTER OF STATE FOR POWER, COAL & NEW AND RENEWABLE ENERGY (INDEPENDENT CHARGE) (SHRI PIYUSH GOYAL)

- (a): No, Madam.
- (b): A statement indicating the benchmark capital cost norm and its breakup for financial years  2015-16  and  2016-17  is  given  at  Annexure  I.  The  basis  for  arriving  at  the  solar  PV module cost, land cost and cost towards mounting structures has been explained in the Order dated 23.3.2016 of the Commission, the relevant extracts of which are given at Annexure-II, Annexure-III and Annexure-IV respectively.
- (c): The issue was examined by the CERC while determining the benchmark capital cost for  Solar  PV  projects  for  the  year  2016-17.  The  relevant  extract  from  the  Order  dated 23.3.2016 discussing the issue is given at Annexure II.

(d): Under the scheme of Solar Parks, 32 solar parks have been sanctioned and State-wise details covering the land chosen are given at Annexure-V. For other Solar power projects, the land is identified by the project developers.

(e)&(f):  The  issue  was  examined  by  the  Commission  while  determining  the  benchmark capital cost for Solar PV projects for the year 2016-17. The relevant extract from the Order dated 23.3.2016 discussing the issue is given at Annexure-IV.

(g): Solar power projects are selected on transparent bidding basis and the CERC tariff is taken only as benchmark.

******

## ANNEXURE-I ANNEXURE-I REFERRED TO IN REPLYH TO PART (A) OF LOK SABHA UNSTARRED QUESTION NO. 816 FOR 28.4.2016

| S.No.   | Particulars                                                            |   Capital Cost norm for FY 2016-17 (Rs. lakhs/MW), for Solar PV projects |   Capital Cost norm for FY 2015-16 (Rs. lakhs/MW), for Solar PV projects |
|---------|------------------------------------------------------------------------|--------------------------------------------------------------------------|--------------------------------------------------------------------------|
| 1       | PV Modules                                                             |                                                                   328.39 |                                                                   332.35 |
| 2       | Land Cost                                                              |                                                                    25    |                                                                    25    |
| 3       | Civil and General Works                                                |                                                                    35    |                                                                    50    |
| 4       | Mounting Structures                                                    |                                                                    35    |                                                                    50    |
| 5       | Power Conditioning Unit                                                |                                                                    35    |                                                                    45    |
| 6       | Evacuation Cost up to Inter-connection Point (Cables and Transformers) |                                                                    44    |                                                                    55    |
| 7       | Preliminary and Pre- Operative Expenses including IDC and Contingency  |                                                                    27.63 |                                                                    48.5  |
|         | Total Capital Cost                                                     |                                                                   530.02 |                                                                   605.85 |

## ANNEXURE-II ANNEXURE-II REFERRED TO IN REPLYH TO PART (a) OF LOK SABHA UNSTARRED QUESTION NO. 816 FOR 28.4.2016

## Para 1 of CERC Order in Petition No. 17/SM/2015, dated 23.03.2016

'......

## Analysis and Decision

Several stakeholders have pointed out that assuming a drop of 11% in module prices might  be  unjustified,  as  the  module  prices  have  stabilized  over  last  few  months. Module price trends, starting April 2015, are as below:

Table1:Crystalline PV Module Costs

(All Figures in $ per watt)

| Country   |   Germany |   Japan, Korea |   China |   Southeast-Asia, Taiwan |
|-----------|-----------|----------------|---------|--------------------------|
| Apr-15    |      0.65 |           0.69 |    0.59 |                     0.52 |
| May-15    |      0.67 |           0.73 |    0.62 |                     0.55 |
| Jun-15    |      0.66 |           0.73 |    0.63 |                     0.55 |
| Jul-15    |      0.64 |           0.72 |    0.63 |                     0.55 |
| Aug-15    |      0.63 |           0.72 |    0.63 |                     0.55 |
| Sep-15    |      0.65 |           0.72 |    0.64 |                     0.54 |
| Oct-15    |      0.65 |           0.73 |    0.63 |                     0.54 |
| Nov-15    |      0.63 |           0.7  |    0.59 |                     0.52 |
| Dec-15    |      0.64 |           0.7  |    0.6  |                     0.51 |
| Jan-16    |      0.64 |           0.72 |    0.61 |                     0.52 |

Source: pvXchange.com

Mercom has also reported stagnant prices for Chinese/Taiwanese modules for past several months in their newsletter. This sentiment has been echoed in stakeholder comments.

While  the  spot  prices  reflect  short  term  market  rates,  for  planned  projects,  it  is  a standard  practice  for  developers  to  negotiate  price  and  quantity  ahead  of  time. However, given quality concerns and to ensure life of 25 years, we must consider Tier-1  module prices.  Industry  players such  as  Adani  Power, Tata Solar, Welspun etc. have also suggested that module prices be considered at $0.48/W. Thereby, the Commission  sets  module  prices  at  $0.48/W,  assuming  prices  are  expected  to  be fairly stable in the coming year.

Regarding  the  domestic  content  requirement,  the  Commission  would  like  to clarify that the present exercise of benchmark capital cost is for generic tariff and not for project specific projects. '

## ANNEXURE-III REFERRED TO IN REPLYH TO PART (A) OF LOK SABHA UNSTARRED QUESTION NO. 816 FOR 28.4.2016

## Para 4 of CERC Order in Petition No. 17/SM/2015, dated 23.03.2016

'.....

## Analysis and Decision

It is understood that land costs vary from state to state and based on the particular location of  the projects. However, it must be noted that typically land deployed for these projects is barren in nature. Additionally, land cost has been stagnant over the last financial year. Thus, the Commission retains the land cost at Rs. 25 lakhs/MW.'

## ANNEXURE-IV REFERRED TO IN REPLYH TO PART (A) OF LOK SABHA UNSTARRED QUESTION NO. 816 FOR 28.4.2016

## Para 6 of CERC Order in Petition No. 17/SM/2015, dated 23.03.2016

'.....

## Analysis and Decision

.....  The  Commission  feels  that  40-45  MT  of  steel  per  MW  is  a  good  benchmark assumption for  the  amount  of  steel  used  in  mounting  structures,  if  based  on  cold rolled coil. For very strong wind conditions, one can assume 50 MT/MW at the high end of the spectrum. If based on hot rolled coil, the weight of the structure might be slightly higher. Price of hot or cold rolled coil as raw material for the c-channel may be  assumed  to  be  Rs.  41,500/ton  on  average*,  with  an additional cost for galvanization and channel preparation. Price of finished structure may be assumed to  be  around  Rs.60,000  -  70,000/ton.  Thus,  the  cost  of  mounting  structures, assuming  50  tons/MW,  is  determined  to  be  Rs.35  lakhs/MW.  The  Commission retains the cost of mounting structures at Rs.35 lakhs/MW.'

*Source: http://www.sail.co.in/sites/default/files/buyers\_notice/billingual\_eng\_2.pdf

## ANNEXURE-V ANNEXURE-V REFERRED TO IN REPLYH TO PART (D) OF LOK SABHA UNSTARRED QUESTION NO. 816 FOR 28.4.2016

## List of Solar Parks approved

|   Sl. No. | State             |   Capacity (MW) | Land identified at                                                                                     |
|-----------|-------------------|-----------------|--------------------------------------------------------------------------------------------------------|
|         1 | Andhra Pradesh    |            1500 | NP Kunta of Anantpuramu & Galiveedu of Kadapa Districts                                                |
|         2 | Andhra Pradesh    |            1000 | Kurnool District                                                                                       |
|         3 | Andhra Pradesh    |            1000 | Galiveedu Madal, Kadapa district                                                                       |
|         4 | Andhra Pradesh    |             500 | Talaricheruvu Village, Tadipathri Mandal, Anathapuramu District of Andhra Pradesh                      |
|         5 | Arunachal Pradesh |             100 | Tezu township in Lohit district                                                                        |
|         6 | Assam             |              69 | Amguri in Sibsagar district                                                                            |
|         7 | Chhattisgarh      |             500 | Rajnandgaon, Janjgir Champa districts                                                                  |
|         8 | Gujarat           |             700 | Radhanesda, Vav, Distt. Banaskantha                                                                    |
|         9 | Haryana           |             500 | Bugan in Hisar district, Baralu and Singhani in Bhiwani district and Daukhera in Mahindergarh district |
|        10 | Himachal Pradesh  |            1000 | Spiti Valley of Lahaul & Spiti District                                                                |
|        11 | Jammu & Kashmir   |             100 | Mohagarh and Badla Brahmana, District-Samba                                                            |
|        12 | Karnataka         |            2000 | Pavagada taluk Tumkur dist.                                                                            |
|        13 | Kerala            |             200 | Paivalike, Meenja, Kinanoor, Kraindalam and Ambalathara villages of Kasargode district                 |
|        14 | Madhya Pradesh    |             750 | Rewa, MP                                                                                               |
|        15 | Madhya Pradesh    |            1000 | Neemuch, Agar and Mandsaur                                                                             |

|   Sl. No. | State                                                   |   Capacity (MW) | Land identified at                                                                                                                                      |
|-----------|---------------------------------------------------------|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|        16 | Madhya Pradesh                                          |             500 | Rajgarh and Shajapur                                                                                                                                    |
|        17 | Madhya Pradesh                                          |             500 | Chhattarpur and Morena                                                                                                                                  |
|        18 | Maharashtra                                             |             500 | Sakri, Dhule district of Maharashtra                                                                                                                    |
|        19 | Maharashtra                                             |             500 | Dondaicha, district Dhule, Maharashtra                                                                                                                  |
|        20 | Maharashtra                                             |             500 | Taluka Patoda, district Beed, Maharashtra                                                                                                               |
|        21 | Meghalaya                                               |              20 | West Jaintia Hills & East Jaintia Hills districts                                                                                                       |
|        22 | Nagaland                                                |              60 | Dimapur, Kohima and New Peren districts                                                                                                                 |
|        23 | Odisha                                                  |            1000 | Balasore, Keonjhar, Deogarh, Boudh, Kalahandi and Angul                                                                                                 |
|        24 | Rajasthan                                               |             680 | Bhadla Phase II, Bhadla, Rajasthan                                                                                                                      |
|        25 | Rajasthan                                               |            1000 | Bhadla Phase III, Bhadla, Rajasthan                                                                                                                     |
|        26 | Rajasthan                                               |             750 | Villages Ugraas, Nagnechinagar & Dandhu, tehsil Phalodi, dist Jodhpur (450 MW) and villages Lavan & Purohitsar, tehsil Pokaran, dist Jaisalmer (300 MW) |
|        27 | Rajasthan                                               |             500 | Bhadla Phase IV, Bhadla, Jodhpur Rajasthan                                                                                                              |
|        28 | Rajasthan (321MW through support of GoI out of 1500 MW) |             321 | Fatehgarh & Pokaran, Jaisalmer, Rajasthan                                                                                                               |
|        29 | Telangana                                               |             500 | Gattu, Mehboob Nagar Distt.                                                                                                                             |
|        30 | Uttar Pradesh                                           |             600 | Jalaun, Allahabad, Mirzapur and Kanpur Dehat districts                                                                                                  |
|        31 | Uttarakhand                                             |              50 | Industrial Area, Sitarganj (Phase I), Industrial Area, Sitarganj (Phase II) and Industrial Area, kashipur                                               |

|   Sl. No. | State       |   Capacity (MW) | Land identified at                    |
|-----------|-------------|-----------------|---------------------------------------|
|        32 | West Bengal |             500 | East Mednipur, West Mednipur, Bankura |
|        33 | TOTAL       |           19400 |                                       |