One of the successful bidders of India’s cheapest solar power project has brushed aside apprehensions about the project’s financial viability.
Mahindra Renewables, one of the three successful bidders in the recently concluded auction for the Rewa solar power park, has stated that the development and operations of the project will be financially viable at the tariff of Rs 3.30/kWh over a 30 year period.
Talking to an Indian media outlet, Basant Jain, Director–Mahindra Renewables, said that the incentives offered for this particular project were attractive enough for the company to quote the bid of Rs 2.974/kWh (4.4¢/kWh) for the first year. The tariff will increase by Rs 0.05/kWh (0.07¢/kWh) every year for 15 years, thus translating into a levelized tariff of Rs 3.30/kWh (4.9¢/kWh), the lowest-ever in India.
The levelized tariff is 24% lower than the previous lowest tariff bid of Rs 4.34/kWh (6.5¢/kWh) for a 70 megawatt project in Badhla solar power park.
The tender for the 750 megawatt Rewa solar power park was launched in March 2016, giving ample time to the project developers for making preparations for the actual auction. Mahindra Renewables visited the project site several times and carried out technical analysis of the project site, Jain stated.
Having 25% of the capacity already tied up with the Delhi Metro Rail Corporation (DMRC), the provisions of deemed generation in case of unavailability of transmission capacity, payment guarantees from the state government, and option to sell power in the open market are some of the major incentives offered for the first time in an auction.
Another significant incentive was the availability of low-cost debt from the International Finance Corporation (IFC).
Jain noted that such tariffs can be sustainable in the upcoming auctions only if similar conditions are available to the project developers.