The Indian state of Gujarat has struck gold in its latest solar power auction as project developers submitted one of the lowest-ever bids seen in the Indian market for utility-scale solar power projects.
According to media reports, a subsidiary of US-based UPC Energy Limited quoted the lowest tariff bid of Rs 2.55/kWh (3.59¢/kWh) in an auction of 500 megawatts solar power capacity in Gujarat. The company, UPC Solar, secured rights to develop a 50-megawatt solar power project through a special purpose vehicle (SPV) formed for the specific purpose of participating in this auction.
The tender issued by Gujarat Urja Vikas Nigam Limited (GUVNL), a government-owned power distribution utility, to installation of 500-megawatt capacity in one of the solar parks in the state. The tender was issued in January 2019 and no maximum tariff bid limit had been set.
The technical bidding round saw immense interest from some of the leading solar power project developers in India. Avaada Energy and ReNew Power submitted bids to develop 250 megawatts of capacity each while Adani Green Energy, and Tata Power submitted bids for 150 megawatts each. Three other developers submitted bids for a cumulative capacity of 245 megawatts. Thus, the 500-megawatt tender attracted bids for 1,045 megawatts, an oversubscription by 545 megawatts.
While no maximum limit for tariffs was set by GUVNL, the bids were expected on the lower side nonetheless. Gujarat has been infamous to cancel or annul solar power tender citing higher-than-expected bids. The state has cancelled at least two such tenders citing higher bids from project developers.
Last month the state cancelled the allocation of 700 megawatts of capacity to three developers as the lowest tariff bid of 2.84/kWh (4.08¢/kWh) was considered too high. Softbank-backed SB Energy, Finland’s Fortum Energy and French utility Engie lost projects of capacities of 200 to 250 megawatts as a result. Similarly, last year the state cancelled a 500-megawatt tender where project developers had quoted tariffs between Rs 2.98/kWh (4.20¢/kWh) and Rs 3.06/kWh (4.31¢/kWh).
In this latest tender, the range of winning bids is quite broad as well, from 3.59¢/kWh to 3.77¢/kWh. This wide range may attract attention of GUVNL. The Solar Energy Corporation of India annulled the allocation of 2.4 gigawatts of capacity in the largest solar power tender in India due to the wide range of winning bids.
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