"Tariffs have to be at a level so that internal rate of return (IRR) is minimum 14 per cent and for that, I think tariff has to be a minimum Rs 5 per unit. There can be issues with the project's economic viability. They can become economically unviable," Tanti told reporters here.
His reply came in response to queries on declining tariffs in renewable energy (RE) projects -- solar and wind -- and their financial viability.
Suzlon has its rotor blades manufacturing facility in Bhuj and maintains sites for some of its clients.
"Lower IRR and profits can impact a utility's capability to make payments. Then, there is also the cost factor," he explained.
Experts say there are also issues related to grid integration and changing weather conditions that can lead to varying and unpredictable power generation.
Tanti, however, said the Indian market is "very promising and demanding" as government has a target of 175 GW of renewable energy by 2022, of which 60 GW is wind power.
"Indian market will continue to grow by 30 per cent," he noted, adding that to achieve such a huge target, the industry needs technology upgradation to counter lower tariffs and at the same time, grow generation capacity at a competitive cost.
Tanti is of the view that firms should invest in technological upgradation and go for cost optimisation to counter declining tariff impacting margins.
Explaining the rationale, he said: "Now the best sites are exhausted and we need to utilise low wind sites. We need to keep in mind the declining tariff. PPA tariffs are going below Rs 5. Because of these two challenges, it is important for us to invest in technology to make projects viable."
He added: "That's why we have developed the S97 120 m wind turbine. S97 2.1 MW is the world's tallest all-steel hybrid tower with a hub-height of 120 m above ground level and has achieved a 35 per cent plant load factor (PLF)."
It increases energy output by around 12-15 per cent over other turbines of same capacity at a height of 90 m, he added.
The group has developed the S111 120-m hybrid tower which can have a PLF of almost 40 per cent.
"So, we are investing in technology to increase power generation as well as utilise low wind sites so that our projects are economically viable even if tariffs go below Rs 5 per unit," he noted.
Suzlon has its research and development centres in Germany, Denmark, the Netherlands and India and has recently opened a Blade Science Center in Vejle in Denmark.
The Pune-headquartered group has installations of around 15.5 giga watt (GW) spread across 17 countries, of which India accounts for the lion's share of about 9.5 GW.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.