Solar power tariffs dipped to Rs 3.15 a unit, a new low, on Tuesday during bidding for the 250-megawatt (Mw) ultra mega solar power park in Kadapa, Andhra Pradesh.
The winning bid at the Kadapa solar park being set up by NTPC is the levelised tariff for 25 years with no escalation. This is lower than the lowest bid received for the 750 Mw solar park in Rewa, Madhya Pradesh.
The lowest bid in last month’s auction in Rewa was Rs 2.97 per unit, but the levelised tariff works out to Rs 3.3 per unit for 25 years.
Levelised tariff includes annual cost escalations in a project that are factored into the final tariff.
Tuesday’s auction, which ran for 15 hours, saw French clean energy company Solairedirect emerge as the lowest bidder for the complete 250 Mw.
Other bidders in the fray included Greenko Energy, Azure Power, Mahindra Renewables and Ostro Energy.
Experts said since NTPC had offered the Kadapa project, power offtake and payment were secure. At both Rewa and Kadapa, there is certainty over power offtake and payments, which experts said was the prime reason for the low bids.
Another reason is the falling prices of solar panels. “Prices of solar modules might fall 20 per cent this year due to oversupply from China to 27-30 cents in the second half of 2017,” Vinay Goyal, chief executive officer of Ganges Internationale, a solar power company, had told this newspaper earlier.
Chinese solar panel makers are facing a glut. “Cheap Chinese panels will make their way into all markets, especially India,” said an executive with a Delhi-based solar module manufacturer.
Another reason for the aggressive bidding is the number of solar power projects offered by states is declining.
The pipeline for mega solar power projects is almost empty. Some states are postponing tenders and others are curtailing projects so as not to burden their power distribution companies with too much renewable energy.
“The pace of utility-scale solar tender announcements and project allocations has slowed down to 4.2-Gigawatt (Gw) and 6 Gw, down 70 per cent and 33 per cent, respectively, from last year.
This trend is likely to continue for another six months,” Bridge to India, a consultancy firm, said in its latest report.
“The government seems to have gone back to the drawing board to incorporate learnings from the Rewa tender and India’s first wind tender,” it added.