Another auction, another record low bid for solar power projects in India.
Once again, an international project developer has placed a record-low tariff bid for solar PV project in India. The new low of US¢6.5 per kWh has been discovered in the competitive auctions under India’s National Solar Mission. The new tariff is around 8% higher than the global record low tariff of US¢5.98 per kWh bid by a AWCA Power-led consortium for 200 MW phase II of the Mohammed bin Rashid Al Maktoum solar park.
The tariff bids was placed by a subsidiary of Fortum Energy. The auction was organised by India’s largest power generator NTPC Limited. The projects allocated will form part of the Badla solar power park that will have total capacity of 420 MW.
A number of factors worked in favour of this correction in tariff, even though most experts had believed that the bids had now bottomed out. Rajasthan is the leading state in India in terms of installed solar power capacity and boasts over 1.2 GW capacity, of the total 5 GW capacity operational in India.
Rajasthan has attractive land lease policies and land cost, which forms a major part of the total capital cost, and which is lower than in most states. As several power plants are already operational and are concentrated in a few specific areas of the state, the power evacuation system is also robust for new projects.
Late last year, SunEdison and SB Energy quoted the lowest tariffs of US¢6.9 per kWh in two separate auctions. SunEdison bagged a 500 MW project in an auction also organised by NTPC Limited in Andhra Pradesh. SB Energy, a company backed by SoftBank, Foxconn and Bharti Enterprises, secured 350 MW capacity in neighbouring state of Telangana.
SunEdison had stated that since the long-term power purchase agreement will be signed with a government-owned company (NTPC Limited) financial institutions might reduce the cost of debt.
International projects developers are leading the way in driving down the tariffs as they are likely to have comparatively easier access to low-cost finance from development banks.