Indian Solar Developers Look To International Markets As Competition Increases

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Stung by sharply rising competition, renegotiations on power purchase agreements and the refusal of offtake by utilities is pushing Indian solar power developers to international markets.

According to an Indian business daily, an increasing number of Indian solar power developers are looking to expand into emerging markets of southeast Asia and Africa. The developers are attracted by high and dollar-denominated tariffs in these markets.

A couple of project developers — Adani Green Energy and Hindustan Power — have stated plans to enter the Bangladesh market. Bangladesh has yet to implement competitive auctions in its nascent solar power market and offers feed-in tariffs which are at a huge premium to tariffs prevalent in India.

Interestingly, Adani Green Energy operates India’s largest solar power project in the state of Tamil Nadu. This project is now the center of contention between the company and state’s power utility over the high tariff.

The Adani project, commissioned last year, gets paid Rs 7.01 (11¢) for every unit of electricity it feeds into the grid. That’s a massive premium to the current lowest tariff bid in the country, nearly three times as much.

Similarly, 15 project developers who had secured rights to develop projects in an auction two years back in the state of Uttar Pradesh have been asked to revise their power purchase agreements at lowered rates.

Competitive auctions held in 2015 in Uttar Pradesh saw utility-scale solar power projects allocated to 15 developers in a tariff range of ₹8.60/kWh (13¢/kWh) and ₹7.02/kWh (11¢/kWh). All these projects are now nearing completion and 14 of the 15 developers have been asked to match the lowest bid of ₹7.02/kWh. This means a reduction of up to 18% for the highest successful bidder.

Another state, Andhra Pradesh, recently refused to acquire electricity to be generated from one of the cheapest solar power projects in the country.

Andhra Pradesh has refused to sign a power purchase agreement for the 250-megawatt solar power project part of the Kadapa solar park, stating that it has sufficient solar power coming up and does not require any more at the moment.

These developments could indicate the start of a disturbing trend which seems sufficient enough to push Indian developers to emerging markets where auctions have not yet been introduced and renewable energy remains an nascent market shielded by government support.

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

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