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					</table><p>A report by <a href="https://www.lazard.com/" target="_blank" rel="noopener">Lazard</a>, an asset management and financial advisory company, found that the low ends of the Levelized Cost of Energy (LCOE) for renewable energy technologies in the U.S. have increased for the first time, driven by persistent cost pressures such as high interest rates.</p>
<p>Despite declines in the high-end LCOE for selected renewable energy technologies, the overall LCOE ranges have tightened, resulting in relatively stable LCOE averages year-over-year. This trend highlights the advantage of well-capitalized companies in building new renewable energy assets​.</p>
<p>The report found that the LCOE for new-build utility-scale solar ranged between $29/MWh and $92/MWh, just behind onshore wind, which had the lowest LCOE ranging from $27/MWh to $73/MWh. Utility-scale solar also had a far lower LCOE than that of coal ($69/MWh to $168/MWh).</p>
<p><img loading="lazy" decoding="async" class="aligncenter wp-image-67162" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1-300x174.png" alt="LCOE-1" width="545" height="316" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1-300x174.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1-768x445.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1-650x377.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1-624x362.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1-600x348.png 600w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-1.png 913w" sizes="(max-width: 545px) 100vw, 545px" /></p>
<p><strong>Energy Storage</strong></p>
<p>The report saw incremental declines in the low-end levelized cost of storage (LCOS) year-over-year. The decline was partly driven by a fall in cell prices with increased manufacturing capacity in China and reduced mineral pricing. The lower LCOS was offset by higher engineering, procurement, and construction costs due to the growing demand, increased timeline scrutiny, and skilled labor shortages.</p>
<p>Due to the Input Tax Credit under the Inflation Reduction Act and lower cell prices, there is a trend of oversizing battery capacity to offset future degradation and useful life considerations. But, the lack of clarity on what qualifies for local content is leading to delays. The recently proposed Section 301 import tariffs on lithium-ion batteries could also lead to increased domestic battery supply but with uncertain cost results.</p>
<p>The LCOE for the 100 MW, 4-hour utility scale standalone storage was in the range of $170/MWh to $296/MWh, while the subsidized storage systems were in the range of $124/MWh to $226/MWh.</p>
<p>Lithium-ion batteries remain the most cost-competitive short-term storage option. However, the industry is looking for non-lithium-based technology solutions, especially for longer-duration use.</p>
<p><img loading="lazy" decoding="async" class="aligncenter wp-image-67163" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2-300x165.png" alt="LCOE-2" width="478" height="263" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2-300x165.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2-768x424.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2-650x358.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2-624x344.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2-600x331.png 600w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-2.png 894w" sizes="(max-width: 478px) 100vw, 478px" /></p>
<p><strong>Hydrogen costs</strong></p>
<p>The levelized cost of green hydrogen using PEM technology for electrolyzers of 20 to 100 MW capacity ranges from $4.45 to $6.05 per kg and $4.33 to $5.49 for green hydrogen using alkaline technology.</p>
<p><img loading="lazy" decoding="async" class="aligncenter wp-image-67164" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3-300x170.png" alt="LCOE-3" width="518" height="294" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3-300x170.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3-768x434.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3-650x368.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3-624x353.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3-600x339.png 600w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/06/LCOE-3.png 898w" sizes="(max-width: 518px) 100vw, 518px" /></p>
<p>With subsidies, green hydrogen can achieve significantly lower levelized costs. For instance, subsidized green hydrogen can reach costs under $2/kg, making it competitive with conventional grey hydrogen produced from natural gas​.</p>
<p>The report&#8217;s authors said that meeting baseload power needs will require a mix of diverse generation technologies. While renewable energy remains cost-competitive, the increasing power demand, driven by factors like AI growth, data center deployment, and electrification, necessitates complementing renewables with firming resources such as energy storage or gas-fired generation.</p>
<p>The report emphasized the need for a balanced energy mix to address the timing imbalance between peak demand and renewable production​.</p>
<p>It said continuous technological innovation, capital formation, and policy were essential for the energy transition. This includes the development of advanced generation technologies, carbon capture, and long-duration energy storage. The cost-competitiveness of renewables will continue to drive the displacement of conventional generation. However, the exact timing and mix will depend on grid investment, permitting reform, and economic policies​.</p>
<p>Last April, a Lazard report <a href="https://www.mercomindia.com/renewable-generation-conventional-energy-in-the-us" target="_blank" rel="noopener">highlighted</a> how onshore wind and utility-scale solar were competitive with conventional generation technologies in some locations, even without subsidies.</p>
<p>This was further <a href="https://www.mercomindia.com/renewable-projects-remain-cost-competitive-through-2021" target="_blank" rel="noopener">evidenced</a> by how renewable projects remained cost-effective despite the 2021 fuel crisis, according to a report by the International Renewable Energy Agency.</p>


Onshore Wind and Utility-Scale Solar in the U.S. Have Lowest LCOE


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					</table><p>The <a href="https://commercialtax.gujarat.gov.in/vatwebsite/gst/gstMain.jsp?viewPageNo=24" target="_blank" rel="noopener">Gujarat Authority for Advanced Ruling</a> has said rooftop solar power systems constitute plant and machinery and, therefore, are eligible for input tax credit under the Goods and Services Tax (GST) Act.</p>
<p>The rationale behind the ruling was that since rooftop solar projects are affixed to the roofs of buildings with nuts and bolts and are not embedded in the earth, they are not immovable and thus can be considered plant and machinery.</p>
<p>The input tax credit cannot be availed for goods and services for the construction of an immovable property like an office building.</p>
<p>An input tax credit allows an entity to offset the GST liability on the supply of goods or services from the GST paid on the purchase of goods or services used by a business for captive power generation.</p>
<p>The petitioner, Unique Welding Products Ltd &#8211; a manufacturer and seller of welding products, installed a 440 kW rooftop solar system on the roof of its factory for captive use of power to manufacture welding wires in the same building.</p>
<p>The petitioner also entered into an interconnection agreement with power distributer <a href="https://www.mgvcl.com/" target="_blank" rel="noopener">Madhya Gujarat Vij Company</a>.</p>
<p>It raised two issues in May last year: firstly, whether input tax credit for a rooftop solar project comes under “input capital/goods” or “input services” as per sections 16 and 17 of the GST Act.</p>
<p>Secondly, whether the rooftop solar project qualifies as plant and machinery and thereby does not fall under the category of blocked input tax credit as per Section 7(5).</p>
<p>The Gujarat Authority of Advanced Ruling, after two hearings in August and November last year, concluded in January this year that rooftop solar is indeed eligible for input tax credits.</p>
<p>Gujarat saw the highest installations of rooftop solar in the third quarter (Q3) of 2023, accounting for 26.7% of the total installed rooftop solar capacity in the country, according to the <a href="https://www.mercomindia.com/product/rooftop-solar-market-report-q3-2023" target="_blank" rel="noopener">Q3 2023 Mercom India Rooftop Solar Market Report</a>.</p>
<p>In October last year, Gujarat <a href="https://www.mercomindia.com/gujarat-renewable-energy-policy" target="_blank" rel="noopener">unveiled</a> its renewable energy policy focusing on leveraging the state’s potential of 36 GW of solar and 143 GW of wind capacity to enable a cost-effective and reliable power supply.</p>
<p>The policy will be in force until September 30, 2028, and will encompass renewable energy projects, including ground-mounted solar, rooftop solar, floating solar, canal-top solar, wind, rooftop wind, and wind-solar hybrid ventures.</p>


Input Tax Credit to be Applicable to Rooftop Solar Systems Under GST Rules

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