[_jgdh]

I’ve had this question for a long while but no one to ask it to. You might have the expertise required to answer it.

When I see new solar projects that have tendered absurdly low prices, are the bidders bidding with today’s solar prices or are they betting that solar prices will fall further, allowing them to eventually make a profit? For example Adani solar won a contract to supply energy at INR 3 or $0.05 per kwh. Is that the price of building and operating a solar in 2022 or is it the price that the winning bidder hopes it’ll be in 2024 when they’re building the second and third phases of their contract?

[rogerthat_au]

Your question goes to the core of what we do. Cost of solar on today's price is already really low and the calculation is being done on prices today. Keep in mind per kW yield of solar in India is very different from in the US or further north.

For example, at a cost of 30,000 INR/kW ($405), and a bid price of INR 3, assuming yield of 4.25 kWHr/day per kilowatt, we are looking at an IRR of 10.5% over 20 years. Now add long-term debt to the mix and we are upwards of 12%. Solar doesn't have any moving parts and this assumes operations and maintenance at 15%. If the cost squeezes further by 2024 - the IRR is even more attractive.

Goldman, Walburg, Pension funds, etc are deploying billions in solar for this reason - IRR upwards of 10% over 20-25 years with low risk. That's why we started this business too :)

[_jgdh]

Yeah it’s a great business to be in. As long as the climate doesn’t change, you’ll be pumping out electricity from a plant at an unbeatable price - since there’s no input apart from maintenance costs. How long do solar panels last before you need to replace them though?

Since you’re so on well informed about this here’s another question. I notice that battery prices are roughly halving every 3 years. At what point does it become cheaper to attach batteries to Indian solar plants than it is to operate coal powered plants?

[rogerthat_au]

- How long do solar panels last before you need to replace them though?

A lot of them offer warranties for 20-25 years. Most tier 1 panels are expected to last 25-30 years.

- I notice that battery prices are roughly halving every 3 years. At what point does it become cheaper to attach batteries to Indian solar plants than it is to operate coal powered plants?

At a grid level this is a complex question that I'm not completely qualified to answer because it goes into the larger question of energy mix and energy security. At a factory or building level, we are not that far - we're already offering monthly packages (in terms of cost) which amounts to 10-15c/unit of a blended rate (solar + battery). The min it breaches 8c/kWHr blended rate, this can become more permanent. I'm speculating but some of what I've seen in Li-ion and ESS flow costs we may be two years or less out.