Ind-Ra: Depreciating Rupee to Pose Challenges to Economical Solar Tariffs

However, post module supply agreements, the developer may opt to hedge the exchange rate risk evaluating the costs involved. As per the agency's calculations, an INR1 increase in USD/INR exchange rate leads to a 2 paisa/unit increase in tariff. For instance, if the rupee depreciates to INR67 from INR65 between the time of tariff bidding and finalisation of terms of payment for module supply (which can easily extend to six to eight months), the solar power developer (SPD) will suffer an overall 4 paisa/unit reduction in margin, which is significant considering the modest margins for SPDs. Read The Rest at :