Gujarat Solar Auction Yields India’s Lowest Bid

The Indian state of Gujarat has managed to match neighboring Rajasthan in terms of the lowest solar power tariff quoted by project developers. So far, only Rajasthan could boast about having the cheapest solar power projects.

Gujarat Urja Vikas Nigam Limited (GUVNL) secured tariff bids for 500 megawatts of solar power capacity in the range of Rs 2.44/kWh (¢3.37/kWh) and Rs 2.88/kWh (¢3.98/kWh), with the successful bidders showing very high competition among their respective bids. 

Against the total offered capacity of 500 megawatts, GUVNL had received bids from 13 project developers willing to develop over 1,900 megawatts of capacity — an oversubscription of nearly four times the tender. Some of the major developers that have submitted bids include Orange Renewables, Eden Renewables, Aditya Birla Renewables, Canadian Solar, Azure Power, Adani Green Energy, and Tata Power. Some of the major omissions from this list were Acme Solar and SB Energy — both these companies have been among the largest and most competitive bidders in national level solar power tenders. The initial offers to set up capacity under this tender varied from just 30 megawatts to a full bid of 500 megawatts, by Azure Power.

It is interesting to note that GUVNL has re-tendered this capacity after first completing an auction of 500 megawatts in February this year, and then cancelling the same. While GUVNL did not specify any reasons for the cancellation of the auction, it is widely believed GUVNL found the tariff bids quoted by developers to be too high.

The February 2018 auction saw allocation of 500 megawatts of capacity among four developers with capacities ranging between 50 megawatts and 200 megawatts. The tariff bids ranged between Rs 2.98/kWh (¢4.12/kWh) and Rs 3.06/kWh (¢4.23/kWh).

The tariff bids in the fresh auction have dropped to Rs 2.44/kWh (¢3.37/kWh) and Rs 2.45/kWh (¢3.39/kWh). The lowest bid was placed by Aditya Birla Renewables, which won rights to develop 100 megawatts of capacity. Avaada Power secured 300 megawatts of capacity at Rs 2.44/kWh (¢3.37/kWh) as well. Azure Power had offered to set up 500 megawatts of capacity but managed to win just 100 megawatts due to ammarginally greater bid of Rs 2.45/kWh (¢3.39/kWh). Interestingly, Azure Power had offered to set up 250 megawatts of capacity in the February auction at a tariff bid of Rs 3.06/kWh (¢4.23/kWh). 

It seems that GUVNL’s decision to cancel the February auction and re-tender the capacity was a wise one, and in-sync with market conditions. The February auction actually seems to be an aberration. The auction witnessed a 12.5% increase in the lowest tariff bid compared to the first 500 megawatt solar tender conducted by GUVNL in September 2017. Compared to the September 2017 auction, the lowest tariff bid has fallen by only 8%.

Apart from Acme Solar’s multiple bids at Rs 2.44/kWh (¢3.37/kWh) Aditya Birla Renewables, too, now holds the record for the lowest-ever bid in the Indian solar power sector.