New low for solar rates as Rewa kicks off bid

Energy rates could fall below coal-based power

Solar power rates are set to go further down, with the auction for three units at the ultra mega solar park at Rewa, Madhya Pradesh, to begin at below Rs 4 a unit (kilowatt-hour, or kWh).

Actually a reverse auction (where bidding is by sellers, competing to offer less cost to the buyer), it is to begin on Thursday. The base prices for the three units comprising Rewa Ultra Mega Solar (RUMS) are Rs 3.59, Rs 3.62 and Rs 3.64 a unit. As many as 18 companies would be bidding for rates lower than these. With no government subsidy, the project does not offer viability gap funding (VGF).

The lowest rate till now for grid-connected solar power is Rs 4.34 a unit. Fortum India quoted this in January 2016, when NTPC conducted bidding for the Badla solar park in Rajasthan. Bidder competition can be gauged from the fact that a year later, the highest rate quoted for the Rewa project was only five paise more, at Rs 4.39; this bid, however, has been disqualified.

Among the major companies in the fray are ReNew Power and SoftBank-promoted SBG Cleantech. They’ve bid for all the three units of 250 megawatt (Mw) each.

Shapoorji Pallonji Infrastructure and Torrent had earlier shown interest in putting up 250 Mw each but are out of the race; at Rs 4.39 and Rs 4.26, their quotes were the two highest. According to the rules, those quoting the two highest initial rates would not be allowed to bid, to prevent these from opening too high. The lowest initial rate is the base price for the reverse auction.

RUMS is an equal venture of the state government’s Madhya Pradesh (MP) Urja Vikas Nigam and the central government’s Solar Energy Corporation of India (SECI). It is described as the biggest contiguous solar energy park in the country and the project is supported by the World Bank.

A minimum net worth of Rs 300 crore is required for one unit’s bidding, Rs 550 crore for two units and Rs 750 crore for three units.

The auction will start from the base price for the first year’s rate, of Rs 3.92 to Rs 3.97 a unit. How far companies will be able to bid lower than these will be key, as very low rates can make a project unviable. However, the tariffs are at par with the Rs 3.94 a unit that emerged in a tender floated by the Uttar Pradesh Power Corporation last year for coal-based power. 

According to Sanjeev Aggarwal, managing director and chief executive of Amplus Energy, solar energy is at an inflection point – meaning, it can compete on its own without subsidy against other forms of energy, due to helpful government policies and falling global prices. “Recently, we successfully commissioned a solar power project at HAL Airport in Bengaluru, where for the first time the VGF was negative,” he said.

Amplus is installing rooftop solar at a record low of Rs 3 a unit in Uttarakhand, Himachal Pradesh and Puducherry. In November 2016, it had won a bid to install 14.5 Mw of solar rooftop plants in 10 states. In the remaining states, it ranged from Rs 5.3 to Rs 6.2 a unit. These charges have been fixed for 25 years. It won the bid under the 500 Mw rooftop grid-connected scheme in different states, floated by SECI. Rooftop generation is different from that generated in solar parks, in that the latter is grid-connected and much bigger in scale.

The first power from Rewa (Gurh tehsil) is likely to be available from this September. The MP government invited tenders for 750 Mw in March 2016 but had postponed the bid submission. The project will have three units of grid-mounted solar photovoltaic power plants of 250 Mw each.

The selected bidders will sign two sets of power purchase agreements, with Delhi Metro Rail Corporation (DMRC) and the state government-owned MP Power Management Company (MPPMCL). While DMRC is likely to buy 121 million kWh from each of the three units (almost its entire daytime need), MPPMCL will book 80 per cent of the generation capacity.

Bidders	Bidding capacity (Mw)	UNIT-1	UNIT-2	UNIT-3	Average tariff (paise/kWh)		REVERSE AUCTION
Sembcorp Green Infra	250	359	360	359	359		Selected
Solenergi Power	500	362	362	362	362		Selected
SBG Cleantech	750	364	364	364	364		Selected
Aditya Birla Renewables	250	364	366	368	366		Selected
ACB (India)	250	368	370	369	369		Selected
Hero Solar Energy	500	367	369	374	370		Selected
Enel Green Power	750	362	366	388	372		Selected
GDF Suez Energy India	250	375	375	375	375		Selected
ACME Solar Holdings	250	387	381	383	384		Selected
ReNew Solar Power	750	387	385	386	386		Selected
Azure Power Thirty Four	250	389	389	389	389		Selected
Rosepetal Solar Energy-Adani	750	393	393	393	393		Selected
Orange Renewable	250	397	397	397	397		Selected
Canadian Solar Energy	250	397	397	397	397		Selected
NHDC Ltd	250	395	405	396	399		Selected
AMPL Cleantech	250	403	403	403	403		Selected
Mahindra Renewables	500	409	407	411	409		Selected
RattanIndia Solar 5	250	418	418	418	418		Selected
Torrent Power	250	426	426	426	426		Rejected
Shapoorji Pallonji Infrastructure Capital	250	439	439	439	439		Rejected
Mw: Megawatt
kWh: Kilowatt-hour
Source: Industry