The lowest tariff until now had been Rs 2.44 per unit, reached in a Solar Corporation of India (SECI) auction in May 2017 and again in July 2018. SECI is the nodal agency through which the Ministry of New and Renewable Energy conducts wind and solar power auctions. It declined to confirm the results of the auction.
In the latest SECI auction, Spain’s Solarpack won 300 MW at Rs 2.36 per unit, while Italy’s Enel Green Power won 300MW at Rs 2.37 per unit. Germany’s IB Vogt won 300 MW at the same tariff. Canadian developer AMP Energy and New York based Eden Renewables won 100MW and 300MW at Rs 2.37 per unit.
CDC Group (UK’s development finance institution) backed Ayana Renewable Power won 300 MW at Rs 2.38 per unit. The only local company to win was Renew Power, which got 400 MW at Rs 2.38 per unit, though Renew too is largely backed by foreign investors. Projects can be located anywhere in India.
“Solar equipment costs have been falling very sharply in the last six months because of Covid related demand depression around the world,” said Vinay Rustagi, Managing Director of renewable energy consultancy firm Bridge To India.
Developers are also anxious to win new projects because of the slowdown in power demand and the slow pace of auctions, he said.
“Vanilla solar tenders are becoming rare as there is greater push for more complex round-the-clock and peak power schemes,” Rustagi said. SECI conducted the first-of-its-kind auction for round-the-clock power in May where the levelised winning tariff emerged at Rs 3.60 per unit. ET reported in May that the renewable energy ministry is likely to stop conducting auctions for plain vanilla solar and wind tenders.
This tender received an overwhelming response with bids for more than 5,000MW. “The sector is increasingly dominated by international capital. Barring the largest Indian corporate houses, Indian developers do not have the financing appetite to compete for these projects,” Rustagi said.
One developer felt the fall in price reflected the industry’s desperation following the Covid 19 caused slowdown. “It is disappointing to see the industry acting in desperation. The same developers used to complain about risks (of aggressive bidding and consequent low tariffs) in the media and other forums,” said an industry executive, requesting anonymity. He noted that developers bagging contracts at low prices and later failing to deliver would face severe consequences. “The minister (of New and Renewable Energy) has made it very clear he would blacklist companies which renege on contracts,” he said.
“I don’t understand the reason for this aggression,” said another solar developer, requesting anonymity.
Acme Solar, the developer which had won the contract at the then-lowest tariff of Rs 2.44 per unit in July 2018, has since informed the Central Electricity Regulatory Commission that it will not be able to execute the project. The matter is under litigation.