India Unable to Compete With Record Low Solar Tariffs in Gulf Region

India Unable to Compete With Record Low Solar Tariffs in Gulf Region

An Analysis of Why the Gulf Region Has the Cheapest Solar Tariffs

In a new report from JMK Research & Analytics and the Institute for Energy Economics and Financial Analysis (IEEFA), a detailed analysis is done to analyse why the Gulf region has the cheapest solar tariffs in the world.

It is unlikely that India or indeed other countries will be able to achieve the same low tariffs recorded in the Gulf, as the economic makeup of each country plays a direct role in determining tariffs.

Comparing Gulf Region and Indian Solar Tariffs

Solar tariffs in the Gulf region are the lowest in the world, even lower than the tariffs being achieved in India.

To understand how the Gulf region is achieving such low tariffs, and whether those tariffs can be achieved in other countries, we developed a financial model as a basis for comparison.

Applying this model to India, we found solar tariffs landed in the range of US¢3.46 – 3.56/kWh[1], almost double the tariffs in the Gulf region.

Break-up of Tariffs for Gulf Region and India

Solar tariffs Gulf Region

Source: JMK Research.
Note: 1 USD is considered equivalent to 75 Indian Rupees.
* Case 1- Project with bifacial mono PERC modules with single axis trackers; Case 2- Project with mono PERC modules with fixed tilt.

The key reasons why the Gulf region has lower tariffs than India include:

  • Lower cost of US$ denominated, long-dated financing;
  • Lower expected return on equity (ROE);
  • Higher solar resources leading to higher capacity utilization factor (CUFs);
  • No corporate taxes nor duties on equipment and power sales; and
  • Negligible land cost for solar projects.

Awarded tariffs in the Gulf countries and in India have zero inflation indexation over the 25-year power purchase agreement, meaning the real tariff is contractually set to decline annually, driving electricity system deflation.

Click here to download full report

    Download Report




    [1]  1 USD has been considered equivalent to 75 Indian Rupees.

    About Us

    JMK Research & Analytics is a specialist consultancy firm providing research and advisory services to Indian and International clients across solar, wind and e-mobility segments.

    Based on our in-depth sector experience, strong industry network, we provide key insights and detailed industry information which helps clients develop successful business models and market strategies.

    Contact Us

    JMK Research & Analytics

    Enkay Towers, 5th Floor, Unit No. 12, Udyog Vihar, Phase V, Sector 19,  Gurgaon- 122016

    Phone: +91-7428306655
    Email: contact@jmkresearch.com

    Follow Us