One of the gigantic problems the world is facing nowadays is the energy crisis. Different countries have started various projects on emergency basis to meet this challenge. Solar energy and wind energy are among the most employed resources. An accountancy firm of England issues a ranking of such countries that are concentrating on renewable resources. EY report for the year 2016-17 ranks India at the second position. China is still at the top with more usage of renewable resources. India has snatched the second position from the US. This downfall of US from second to the third position is due to new policies of the government.
According to EY, the second position of India is due to the positive governmental policies. It is also due to boom in the Indian economy. In 2014, Indian Prime Minister had set the target to achieve 175GW energy from renewable resources up till 2022. The government had also vowed to increase the installed capacity to 40% by the year 2030.
Now, the UK accountancy firm has noted the growth in Indian renewable energy resources over the past 3 years. More than 10Gw solar energy is added from 2015 to 2017. Also, the capacity of wind energy has increased to 5.4Gw in 2017-18. As a result of this growth in renewable resources, the prices are decreasing rapidly. Solar developers are offering to supply power at lower prices. They have even offered fewer prices than newly built coal energy sources.
These falling bids are due to cheaper equipment and lower technology costs. This allows developers to maintain margins which have already declined.
Recently, a bid falls down to Rs. 2.62 per unit in an auction of a 500MW grid station in Rajasthan. Also, the tariff has declined to Rs. 3.46 per unit in the first ever auction of Wind power plant. Many developers and investors are expecting the prices to fall further. It is also not possible for all developers to maintain themselves. This is also due to change in currency value and rising interest rates. These falling bids are also creating problems for state-owned distribution systems. Thus, the government should play a part and increase the compliance between RPO (Renewable Purchase Options).