Indian State Cuts Solar Base Tariff By 18% For 860 Megawatt Tender

Weeks after issuing the largest solar power tender under its state policy, Karnataka has announced a sharp cut in base bidding tariff.

The Karnataka Electricity Regulatory Commission announced that the maximum tariff bid that could be submitted by any developer in the 860 megawatt solar power tender would be ₹3.57/kWh (¢5.6/kWh). This marks an 18% reduction from the previous base tariff of ₹4.36/kWh (¢6.9/kWh). 

The base tariff has been reduced following a request submitted to the KERC asking that developers be allowed 18 months, instead of 12 months, to commission the projects.

The previous base tariff was pretty generous with a premium of nearly 80% over the current lowest solar power tariff in India. Karnataka’s power utilities would be the largest beneficiaries of this development as they will pay at least 18% less for the solar power.

Karnataka last month floated a tender to set up 860 megawatts of solar power capacity. This capacity would be divided across 43 locations, with 20 megawatts earmarked for each location.

The bids submitted by prospective developers is expected to be higher than what has been seen in auctions organized by the Solar Energy Corporation of India. Developers would likely have to acquire land themselves and there is not payment assurance that comes with supplying power through SECI or SECI-designated trader.

Karnataka held an auction for 1,200 megawatts of solar power capacity in March 2016. The base tariff for that tender was ₹6.51/kWh (¢10.0/kWh), while the lowest tariff bid submitted was ₹4.69/kWh (¢7.4/kWh).

The tenders announced by the Karnataka government are in line with the state’s solar power policy that aims to have 6,000 megawatts of operational capacity by March 2022. This would include perhaps India’s largest solar power park at Pavagada with 2,700 megawatts of capacity.