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The fall of the rupee has erased the renewable energy sector in India, especially that of solar energy. Electricity producers, heavily dependent on imported solar modules, are at the reception. The moment the dollar became more expensive could have been worse, as the imposition of the backup tax on solar modules purchased in China and Malaysia has already affected several solar projects. In January 2018, when auctions for solar projects were at their peak, oscillating around 63 rupees against the US dollar. Now, it costs more than Rs 10, which throws the project calculations out of the network.
The Crisil rating agency said that nearly half of the solar power capacity currently running rising to Rs 28,000 crore was exposed to a risk of viability because of the continuous decline of the rupee. These include 5.5 GW of projects tendered in the last nine months at very low rates of Rs 2.75 per unit or less. It is unlikely that these projects, which are currently in the implementation phase, have purchased solar modules, with orders generally being placed 9 to 12 months after bid wins. Projects awarded in the past year may become unsustainable if the rupee continues to fall.
The government is considering the possibility of resubmission of projects to reach its target of 100 GW by 2022. If the rupee remains unchanged or continues to decline, each solar project will see a rise in the unit rate .
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