Connect with us

Hi, what are you looking for?


Clean Power

SkyPower Strikes Indian Solar Market — Prices Hit A New Low (In Depth)

Last week, Canada-based solar developer SkyPower marked the start of its business in India by securing 150 MW worth of solar power projects in the central state of Madhya Pradesh (MP).

In doing so, the company also managed to rattle the market by bidding the lowest tariff India has ever seen.

SkyPower offered a tariff of ₹5.051/kWh ($0.08/kWh) to the state-owned Madhya Pradesh Power Management Company Limited (MPPMCL). The previous lowest tariff was quoted by US-based First Solar last October when it bid ₹5.25 ($0.086/kWh) and ₹5.35/kWh ($0.088/kWh) for two 40 MW projects in Andhra Pradesh. However, it is to be noted that First Solar was allowed a 10% escalation in the price after the first year.

300 MW of solar capacity was up for grabs in the state, with a power purchase agreement (PPA) duration ofCharanka Solar Park Gujarat, India 25 years. As per a press release (only available in Hindi) from MPPMCL, this is the first time in India that 100 companies participated in such a bidding process (for solar power projects).

The tender was oversubscribed 12 times and bids for 312 MW were finally accepted. The selected plants are expected to go operational in 18 months.

SkyPower won contracts for three 50 MW plants which will supply power within a tariff range of ₹5.051–5.298/kWh ($0.08–0.084/kWh). Its lowest offer is about 22% lower than MP’s previous low of ₹6.47/kWh ($0.104/kWh) last year.

As per the company’s press release, it has been “assessing the (Indian solar) market very carefully… for the launch and the strategic deployment of a significant number of gigawatts of solar energy.

It is important to note that the offered price has zero subsidy component. In fact, it is lower than the levelized tariff of ₹5.79/kWh under the recently approved “Viability Gap Funding” (VGF) framework. Complete details on VGF at this link.

Several small players were able to win contracts, including Narendra Kumar Khanna, Made Easy Education and Fluid Con Engineers. Apart from these, Hero Future Energies (HFE), Rays Power, and Renew Solar Power also managed to get orders. Interestingly, major solar developers like Reliance, Adani, ACME, and Welspun could not acquire any capacity.

The highest rate of procurement was ₹5.641/kWh ($0.09/kWh) (11% higher than SkyPower’s lowest bid) for 50 MW from HFE, the solar arm of automobile major Hero. HFE could, however, only scrape through 38 MW of capacity.

Regular CleanTechnica readers might be quick to draw a comparison with the tariffs quoted in Dubai, sub-$0.04/kWh in Texas, or the stunningly low price of $0.0387/kWh in Nevada, USA. But please be aware that capital is relatively quite expensive in India.

After the bid results came in, there were several murmurs of prices being “abnormally low” and “unviable.” But this seems like deja vu and has become a regular feature every time the prices hit a new low, in virtually every solar market. The same thing happened in Dubai, for example. Many do believe that the aggressive bidding is simply a case of strategic positioning for future gains.

As per Bloomberg New Energy Finance speculation, SkyPower could have avoided hedging its forex risks, as a result of which their cost of funds could have been reduced to less than a third of local debt costs.

SkyPower also announced in its post bid press release that it has plans to launch an “India Solar Fund” which will provide a platform for investors to pour money in the country’s solar market (presumably through SkyPower).

The bidding process once again brings MP in the spotlight. The state has been slowly and steadily upping its game by creating a solar-friendly investment climate. Currently, MP is placed third after Rajasthan and Gujarat in terms of solar power installed capacity.

MP is also home to India’s largest solar power project developed by a single company and holds the second position in terms of installed capacity under state policy. With 564 MW capacity, it contributes 14% to India’s total installed solar power capacity.

MP seems to have an edge in three areas which are of supreme importance to developers:

  1. Low transmission and loss charges – Rajasthan has one of the highest transmission and loss charges in the country at around ₹1.84/unit which is almost three times of that in MP.
  2. The cost of Land – After the recent policy change in Rajasthan, the land rates have gone up. Earlier, solar developers used to get land at 10% of the district level committee rate but now the developers have to pay as per full rate.
  3. Bureaucratic hurdles – Taking a cue from Gujarat, the MP government has simplified the process of clearances, approvals, and inspections for setting up solar plants.

Of course, this is nothing to take away from the good solar resource and rising power demand in the state!

Next in line is the solar tender result in Telangana (state) which will now be expected to follow a similar or maybe more aggressive bidding.

Please note that for ₹ to $ conversion the rates have been taken for the time period when respective bids were announced. It is not an apples to apples comparison! 

Check out our brand new E-Bike Guide. If you're curious about electric bikes, this is the best place to start your e-mobility journey!
Appreciate CleanTechnica’s originality and cleantech news coverage? Consider becoming a CleanTechnica Member, Supporter, Technician, or Ambassador — or a patron on Patreon.
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Written By

is a Fellow with The Energy and Resources Institute (TERI, New Delhi). He tweets at @indiasolarpost. Views and opinion if any, are his own.


You May Also Like

Clean Transport

Technology advances are breaking all kinds of patterns. One notable improvement is more that women are to be found in automotive workplaces in India,...

Clean Power

Hungarian Company Introduces Improved Solar Modules For Solar Pavement


I’ve always been interested in the idea of using home solar to make my own “electric fuel”, and when someone posted on Twitter that...

Clean Power

Welcome to another issue of our India x Cleantech series! On a monthly basis, we are pulling news from across clean technology sectors in...

Copyright © 2021 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.