New Delhi: India’s solar power tariff hit a new low of Rs2.44 per unit on Friday during the auction of a 500 megawatt (MW) capacity at Bhadla park in Rajasthan.
Acme Solar Holdings Pvt. Ltd and SBG Cleantech placed winning bids of Rs2.44 per kilo-watt hour (kWh) and Rs2.45 per kWh, respectively, to win contracts for the solar park being developed by Infrastructure Leasing and Financial Services Ltd, said a person associated with the auction process conducted by state-run Solar Energy Corporation of India (SECI).
While Acme Solar will develop 200MW, SBG Cleantech, a joint venture between Japan’s SoftBank Group Corp., India’s Bharti Enterprises Ltd and Taiwan-based Foxconn Technology Group, will set up the balance 300MW at the solar park.
“Green future: Latest Solar power auction at Bhadla Solar Park 3 sets new record with electricity tariff of Rs 2.44/unit,” Piyush Goyal, minister for new and renewable energy, power, mines and coal, said in a tweet.
This has set the stage for a tariff correction for electricity from other fuel sources in India for them to stay relevant in India’s energy mix. However, solar is an intermittent electricity supply source.
“This is a historic low tariff for India,” said the person quoted above.
These tariffs are lower than the average rate of power generated by the coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit.
Interestingly, Friday’s bids are not outliers. Hero Solar Energy and ReNew Solar Power placed aggressive bids of Rs2.46 per kWh and Rs2.47 per kWh, respectively, for the Bhadla project.
Avaada Power, Vineet Mittal’s second innings in India’s clean energy space after Tata Power Co. Ltd, bought the entire 1.1 gigawatt (GW) renewable energy portfolio of Welspun Energy Ltd for $1.4 billion last year place a bid of Rs2.60 per kWh.
The other bidders were Shapoorji Pallonji Infrastructure Capital, Rattan India Solar, Duroc Solar, Orange Renewable, UK’s Lightsource Renewable, France’s Solairedirect, Mahoba Solar and Aditya Birla Renewables.
The tender saw 24 bids totalling 5,500MW for the 500MW capacity on offer. SECI shortlisted 13 of them and set the reserve price at Rs3.01 a unit before the reverse auction began on Thursday afternoon.
The last recorded lowest tariff was Rs2.62 per kWh discovered on Wednesday for Adani Power’s 250 MW solar park also being developed at Bhadla.
Even as concerns have been expressed about the sustainability of such low tariffs, these firms have been aggressive in their approach.
Acme Solar was one of the successful bidders for Madhya Pradesh’s Rewa solar project in February wherein it had quoted Rs3.30 per kWh.
SBG Cleantech was among the winning bidders by placing a bid of Rs2.63 per kWh on Wednesday for Adani Power’s 250 MW solar park. SBG Cleantech was set up in June 2015 after SoftBank Corp.’s Masayoshi Son pledged to invest at least $20 billion in solar energy projects in India.
The solar space has already seen a significant decline in tariffs from Rs10.95-12.76 per kWh in 2010-11. The year 2017 has brought the prices further down, aided by aggressive tariffs quoted by foreign firms. Solairedirect SA in an auction last month bid Rs3.15 per kWh to set up 250MW of capacity at Kadapa in Andhra Pradesh.
Of India’s total installed power capacity of 326,848.53MW, electricity generated by coal and gas fuelled projects accounts for 217,492.26MW or 66.54% of the installed capacity. Renewables account for 57,260.23MW or a 17.51% share.