Rising module prices may diminish returns for 12 GW of bid-out solar projects by 200 basis points and inflate tariffs of future bids by 10 to 15 paise per unit, according to Crisil Ratings.

Solar modules form over 50 percent of total project cost and the bulk of them are imported. Thus, material variations in their price and exchange rates from expectations at the time of bidding can pose viability risks on the projects. Developers typically buy the modules 9 to 12 months after they win the auction.

This wide gap exposes projects to the risk of fluctuations in solar panel prices and currency exchange rates. More so because these variables remain unhedged and are also not a pass-through as per agreements.

Source: Economic Times