Rajasthan solar bids touch a new low of Rs 4.34 per unit

But government benchmarking of solar tariff at Rs 4.43 per unit restricts players in Maharashtra

In the bidding for solar projects totalling 420 megawatt (Mw) in Rajasthan, under the National Solar Mission, the winning bid touched a new low of Rs 4.34 per unit. The bid was by Finnish solar power company Fortum Energy for a 70-Mw project. However, lowering of benchmark tariff by the Centre did not go too well in Maharashtra, which saw subdued interest from the companies participating in bidding for 500 Mw in the state.

Rajasthan saw a spurt of foreign companies lining up for solar projects. US firm Rising Sun Energy quoted Rs 4.35 per unit for two projects with a total capacity of 140 Mw. France’s Solairedirect has quoted the same tariff for same capacity projects. Among the domestic ones, Rattan India, through its subsidiary Yarrow Infrastructure, won 70 Mw by quoting Rs 4.36 per unit.

Fortum’s quoted tariff is the lowest bid received in solar power projects so far. The last lowest bid was Rs 4.63 a unit by Japan’s SoftBank through its joint venture in India, SBG Cleantech, for 350 Mw in Andhra Pradesh.

In the wake of constantly falling solar tariff, the government benchmarked the solar tariff at Rs 4.43 a unit. Maharashtra’s 500-Mw was the first one to come up for bidding under the changed norm. At this fixed tariff, the government is providing viability gap funding (VGF) of up to Rs 1 crore for each Mw (Rs 1.3 crore for domestic content-based projects) payable in six instalments. VGF-based bidding is conducted by the Solar Energy Corporation of India.

Bidders will be allocated projects on the basis of most competitive VGF quotes. The Maharashtra tender received bids from 14 developers for total capacity of less than 1.8 gigawatt (Gw) in contrast to NTPC’s recent 500-Mw tender in Andhra Pradesh, which received bids aggregating 5.5 Gw from 30 bidders. The reason for the subdued demand was because the change was made at the last moment.

The last bidding for the 500-Mw solar power park in Andhra Pradesh witnessed the lowest bid of Rs 4.63 a unit by US solar firm SunEdison.