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Solar power tariffs expected to as low as Rs3.50 a unit in 3 years.

Solar power tariffs in India, which have fallen below Rs.5 per unit since November, are expected to fall further as the industry doubles volumes every year and the cost of producing power continues to decline.At least three industry experts Mint spoke to said that tariffs will fall to as low as Rs.3.5 per unit in three years owing to better use of technology, higher volumes, increased competition and a favourable regulatory environment.

“There is no question about whether they (tariffs) will go down or not. Typically we are seeing a 3-4% increase in efficiency and about 3-4% reduction in costs. So we expect that solar tariffs will continue to go down by 5-8% year-on-year,” said Vikram Kailas, managing director at renewable energy producer Mytrah Energy Ltd.

“The cost of production continues to come down. The challenge of course is by how much and whether it becomes unsustainable in specific points in time,” said Vinay Rustagi, managing director, Bridge to India, a consulting firm.Bridge to India sees tariffs falling by at least 5% annually and calls a sub-Rs.4 per unit tariff a realistic number.“Other subsectors within power generation do not expect (a) decline in prices. So from grid-parity or competitive aspect, solar is the most attractive source of energy for long