India is preparing for yet another solar photovoltaic power auction as it pushes for 100 GW installed solar power capacity by 2022.
The latest draft guidelines pertain to an impending auction of 2 GW solar PV capacity, possibly within this calendar year. The auction will be a part of the National Solar Mission, India’s landmark policy initiative to boost solar power capacity.
This auction will be in addition to the planned 3 GW auction also to be held later this year. The 3 GW auction will be based on competitive bidding for power sale tariffs, while in the 2 GW auction prospective project developers will bid for the least amount of capital cost support they require from the government to set up per unit (viability gap funding or VGF) of solar PV power capacity.
These different approaches are part of the government’s policy to try out all forms of project allocation methods.
The Indian government had earlier conducted a VGF auction in 2014. A total of 750 MW capacity was offered in the auction which received an overwhelming response with prospective developers submitting bids for more than 2 GW.
The government had set aside half of the 750 MW capacity offered in that auction for projects to be set up using only India-made modules. In the proposed auction of 2 GW, only 250 MW capacity will be bound by such an obligation. This is probably the lowest Domestic Content Requirement (DCR) share ever in an auction under the National Solar Mission.
Significantly, the draft guidelines were issued around the time President Obama was visiting India. President Obama announced up to $4 billion in low-cost debt financing for Indian renewable energy projects that use US-made equipment.
This auction will be followed by four more similar auctions over the next 5 years with a cumulative capacity of 5 GW.
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