In a shocking decision by the Solar Energy Corporation of India (SECI), five major solar power developers lost 2.4 gigawatts of capacity they had secured last month in the country’s largest-ever solar power auction.
Multiple unnamed sources told Indian media outlets that SECI has decided to cancel the allotment of 2.4 gigawatts of solar power capacity to five successful bids in the auction held 13 July 2018. The SECI had auctioned 3 gigawatts of capacity in the largest-ever solar power auction in Indian history.
The reason for the cancellation of allocated capacity to all but one developer is mind boggling. The government feels that the spread of price bids was too wide, and that the tariff bids quoted were high.
The 3 gigawatt tender was massively oversubscribed with as many as 11 developers willing to set up a total of 10.3 gigawatts capacity. The initial winners of the tender included the who’s who of the Indian solar power market.
The lowest bid was placed by Acme Solar Holdings, which bagged 600 megawatts of capacity at Rs 2.44/kWh — the joint lowest-ever solar bid in India’s history. Azure Power and Adani Green Energy secured 300 megawatts of capacity each at Rs 2.64/kWh and Rs 2.71/kWh, respectively. Canadian Solar scored a rare win at Indian auctions, and bagged 200 megawatts of capacity at Rs 2.70/kWh. ReNew Power Ventures, the largest independent power producer in India, bagged 500 megawatts of capacity for Rs 2.71/kWh. Finally, the Softbank-backed SB Energy won the largest volume of capacity any company had ever secured in a solar power auction in India — 1,100 megawatts for Rs 2.71/kWh. SB Energy had actually put in a bid to develop 1,800 megawatts but the allocation was truncated due to limited capacity on offer.
Mahindra Susten, Mytrah Energy, Tata Power Renewable Energy, Hero Future Energies, and Actis Energy lost out due to higher tariff bids.
Now, following SECI’s decision to cancel the 2.4 gigawatts allocation, only Acme Solar Holdings will be able to move ahead with its projects. According to the unnamed sources, the big gap of Rs 0.20/kWh between Acme’s and everyone else’s bid was the reason for cancellation. The difference between the lowest and highest winning bid was Rs 0.27/kWh, or 11% of the lowest bid.
While the gap between the lowest and second-lowest bid is indeed large, all bids were well inside the ceiling bid of Rs 2.93/kWh. The highest bid being at a discount of 7.5% to the ceiling rate.
It is interesting to note that the 2.4 gigawatt capacity allocation cancelled is itself more than any solar power tender ever floated in India’s history. This partial cancellation adds to the growing trend of cancelling solar and wind energy tenders by government agencies citing high price bids. States like Gujarat, Karnataka, Uttar Pradesh, and Jharkhand have either cancelled tenders after allocation, or renegotiated tariff bids with successful bidders. However, this is perhaps the first time SECI has done so.