Work at the Ministry of New and Renewable Energy in India is in full swing to chalk out plans to auction several gigawatts of solar power as it hopes to add 100 GW solar power capacity by 2022.
The latest measure in this regard is the issuance of draft guidelines (PDF) to auction 3 GW of solar power capacity. The auction will be part of the ultra mega solar power projects policy recently unveiled by the Indian government.
A few weeks back, the ministry had also issued similar guidelines for a 1 GW solar park in the southern state of Andhra Pradesh. The ministry is yet to take a final call on the proposed auction.
The 3 GW capacity will be spread across several states in India. The ministry will distribute the capacity among the states for which the prospective developers can place bids. A part of the 3 GW capacity will have to be based on domestically manufactured solar power equipment. This could be one-third but unlikely to be more than half of the total offered capacity.
Prospective developers can bid to set up solar power projects with a minimum capacity of 10 MW. The power generated from the projects will be bundled with power generated from thermal power projects in the ratio of two to one. The cumulative power shall be sold at the weighted average price and is expected to be lower than only solar power. This would encourage the cash-strapped power distribution companies to purchase renewable energy to satisfy their renewable purchase obligation.
A large number of companies are expected to take part in these auctions, as the cost of solar power generation has fallen significantly over the last few years. Additionally, the government has decided not to impose anti-dumping duties on imported solar power equipment which allows developers to further reduce costs. Another reason, perhaps the most important in India’s context, is the impending economic recovery and reduction in interest rates.
These favorable conditions have attracted some of the leading solar power companies in the world to explore opportunities in the Indian solar power market. Recently, First Solar successfully participated in a solar power auction while SunEdison signed a deal to set up 5 GW solar power capacity in one of the states.
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