Govt benchmarks tariff for Bhadla solar park at Rs3.43 per unit

The Centre has benchmarked a tariff ceiling of Rs3.43 per unit for upcoming auctions for the solar power park in Bhadla, Rajasthan, in acknowledgement of the steep fall in tariffs in recent tenders.
 

The Solar Energy Corporation of India (SECI) has mentioned in the tender document, “it shall enter into power purchase agreement with successful solar power developers for a period of 25 years. The maximum tariff payable to the project developer is fixed at Rs3.43 per unit for 25 years”. Business Standard has reviewed the tender document dated June 21, 2017.
 

The project capacity is 750 Mw, of which 500 Mw is being built by IL&FS and 250 Mw by Adani. Bidding will be held separately, but the benchmark tariff remains.
 

The SECI offers viability gap funding up to Rs1 crore per Mw to project developers. There is the benefit of accelerated depreciation for project developers who do not opt for viability gap funding. The development comes a month after bids in auctions for the first phase of 500 Mw at Bhadla fell to Rs2.44 per unit. Two days earlier, the tariff received was Rs2.62 per unit for the 250 Mw portion of the park to be developed by Adani Power, signifying an 80 per cent fall in tariffs in six years.
 

The tariff in Bhadla was fixed for 25 years with no escalation and bidders in the previous two tenders did not seek viability gap funding, officials said.
 

The industry is expecting tariffs to fall to Rs2 per unit in the upcoming tender. Lack of future big tenders, the large size of the park and influx of cheap financing and capital options were cited as reasons for such low anticipated bids.
 

Bridge to India in a recent report said increased competition among developers because of fewer tenders and the lack of pipeline visibility over the next year were leading to such low tariffs. It said the Indian solar power market was becoming overheated and that these tariffs were unsustainable.
 

“Falling tariffs make solar power more attractive for consumers but are also making investors and lenders jittery. In the near term, they are also creating uncertainty in the minds of policymakers and creating new risks for older projects auctioned at two or three times higher tariffs,” it said in a report on the Bhadla solar tariffs.