India delays solar auction deadline for second time

India delayed the deadline for companies to submit bids in its next national solar auction for the second time after developers raised concerns on the ability of cash-strapped state utilities to pay for power.

The deadline has been pushed back almost a month to January 20, state-run Solar Energy Corporation of India, which will conduct the auction of 750 Mw of capacity, said on its website. Earlier, it had delayed the deadline from November 29 to December 28.

The auction will be the first since 2011 by India's National Solar Mission and offer Rs 1,875 crore ($300 million) in grants to cover as much as 30 per cent of project costs. Developers will submit bids specifying the funds they're seeking, and the lowest bidders will win.

While Solar Energy Corporation, which will buy power from the projects, has promised companies they will get paid, some developers are worried, according to Bridge to India Energy Pvt.

"Solar Energy Corporation itself does not have the funds to pay them unless it sells the power either to state-run distribution utilities or other buyers," said Jasmeet Khurana, head of market intelligence at the New Delhi-based solar advisory.

The government revised the payout period of grants from 12 months to five years since the auction was first announced last May, raising financing costs and reducing returns, said Vineet Mittal, managing director of Welspun Energy Ltd, India's largest photovoltaic developer.

"The way it is structured has raised a fair bit of concern," he said today by phone.

The auction is unlikely to attract as many bids as previous ones, and Welspun still hasn't decided if it will participate, Mittal said. India's first solar auction in 2010 received three times the proposed capacity offered.