In our previous article Why invest in solar in India? we have analyzed why it make sense to invest in solar in india today, in this article we are going to analyze some existing business models in Solar PV
Solar power can be sold through one the following models:
- NVVN Model: Solar power is sold at the competitively bid tariff (under NSM bidding) to NVVN(NTPC Vidyut Vyapar Nigam) which in turn sells it to state power distribution companions (DISCOMS).
- State policy Feed-in-Tariff(FIT) Model: Solar power is sold within the state to DISCOMS at Feed-in-tariff determined by state solar policy
- REC Model: Under this model, power consumers/distributors/sellers e.g. DISCOMS buys the power at average pooled purchase cost(APPC) from the conventional power generation companies and buys one REC for every 1 MWh of power purchased.
- Power exchange Model: Under this model, the power is sold over the exchange and the seller gets market price per KWh and REC for every 1 MWh of sale of power.
While these business models are to be adopted depending on the opportunity in different states, the current opportunity exists under the REC route. While initial development started under the FIT route, the reverse bidding has taken the solar prices at very low levels of the order of ₹ 6/kWh
In Andhra Pradesh reverse bidding has set the price of solar power at ₹ 6.49/KWh
It is important for solar investors/developers to keep a close watch on the different policies at state level and the investment business model can be selected as and when states come up with the revised policy guidelines.
As of today, the preferred business model is to invest in Solar PV is REC model, considering the fact that RECs are selling at a price of ₹ 9.3 /kWh, it is an important opportunity for solar investors to tap these benefits which are currently available until 2016-17