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Participants in the Indian solar power market seem to have been embroiled in a mad race to the lowest possible tariff, the recent competitive auctions for large-scale projects has shown.

Clean Power

Indian Solar Tariff Bids Drop 26% In Just 3 Months

Participants in the Indian solar power market seem to have been embroiled in a mad race to the lowest possible tariff, the recent competitive auctions for large-scale projects has shown.

Originally published on CleanTechies.

Participants in the Indian solar power market seem to have been embroiled in a mad race to the lowest possible tariff, the recent competitive auctions for large-scale projects has shown.

Since February of this year, four major solar power auctions have taken place in India with the lowest tariff bids falling by as much as 26% between the first and the latest auction. The race to lower tariff bids has been fueled primarily by the crash in solar module prices, regulatory support from the government and, perhaps, the promise and hope of cheap debt finance.

In February, a total of 750 megawatts of capacity was auctioned at a first year tariff of Rs 2.97/kWh (4.6¢/kWh) which translates into levelized tariff of Rs 3.30/kWh (5.1¢/kWh) over a period of 25 years. The auction was historic in terms of the bids, mode of sale, and dirt-cheap debt finance on offer from the International Finance Corporation. The winners in this auction were Acme Cleantech Solutions, Mahindra Renewables, and Solenergi.

In April, India’s largest power generation company NTPC Limited offered 250 megawatts at the Kadapa solar power park in the state of Andhra Pradesh. The winner was Solairedirect, a subsidiary of French utility Engie. It secured the entire capacity at Rs 3.15/kWh (4.9¢/kWh) with the highest tariff bid going as high as Rs 4.68/kWh (7.2¢/kWh).

In May, two auctions were held back-to-back over a span of two days. The capacity on offer was 750 megawatts — 250 megawatts by Adani Enterprises and 500 megawatts by IL&FS — at the Bhadla solar power park in the state of Rajasthan.

At least 14 developers placed the final bids which ranged between Rs 2.62/kWh (4.1¢/kWh) and Rs 3.59/kWh (5.6¢/kWh). Only three of these 14 bids were higher than the previous lowest bid of Rs 3.15/kWh (4.9¢/kWh) discovered in the Kadapa solar park auction, and nine bids were lower than Rs 3.00/kWh (4.7¢/kWh).

Phelan Energy (50 megawatts), Avaada Energy (100 megawatts), and SB Cleantech (100 megawatts) were the winners in this auction.

The second auction in May for the Bhadla solar power park witnessed increased competition among the project developers. Only one bid was greater than the winning bid of Kadapa solar power park, and five bids were lower than the winning bid of Bhadla solar power park two days back.

Acme Cleantech Solution (200 megawatts) and SB Cleantech (300 megawatts) were the winners in this auction at a tariff of Rs 2.44/kWh and Rs 2.45/kWh (3.8¢/kWh), respectively. The massive jump in competition within two days is evident from the fact that Acme Cleantech Solutions reduced its bid from a losing one of Rs 3.36/kWh (5.2¢/kWh) in the 250 megawatts Bhadla auction to just Rs 2.44/kWh (3.8¢/kWh) for the 500 megawatts auction — a decline of 27.4% in a matter of two days.

SB Cleantech also reduced its tariff bid from Rs 2.63/kWh (4.1¢/kWh) to Rs 2.45/kWh (3.8¢/kWh), a drop of 6.8%. ReNew Power Ventures also dropped its bid from Rs 2.74/kWh (4.3¢/kWh) to Rs 2.47/kWh (3.8¢/kWh) between the two auctions but failed to score any win.

Reprinted with permission.

 
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An avid follower of latest developments in the Indian renewable energy sector.

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