Higher land, borrowing costs keeping solar tariff above Rs 3 per unit in UP

Higher land and borrowing costs have kept solar power tariff above Rs 3 per unit in the 500 MW capacity auction conducted by Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA), a source said.

The Rs 3.17 per unit tariff is higher than lowest ever tariff of Rs 2.44 per unit discovered in solar energy project auctions in the country. Recently, in September, bidders quoted Rs 2.44 per unit for 500 MW solar capacities auctioned by Gujarat Urja Vikas Nigam.

Earlier, in June Rs 2.70 per unit was quoted in an auction conducted by the Solar Energy Corporation of India (SECI) for 750 MW Solar PV earlier. Solar tariff had touched an all-time low of Rs 2.44 per unit last year in May.

The source said the UPNEDA conducted the auction for 50 GW capacities, allowing bidders to quote multiple bids for different packages and the tariff remained higher at Rs 3.17 per unit due to expensive land prices in Uttar Pradesh.

The developers will install this solar capacities across the state. The UPNEDA concluded the auction late in the evening on Tuesday.

Earlier, the UPNEDA had cancelled the auction for 1,000 MW solar energy capacities for which auction was conducted in July this year. The lowest tariff of Rs 3.48 per unit was quoted in the auction.

The source said the lowest tariff of Rs 3.17 per unit was quoted by Maheshwari Mining & Energy Pvt Ltd and NTPC Ltd (RE) for 20 MW and 140 MW respectively.

The Maheshwari Mining & Energy Pvt Ltd also quoted Rs 3.19 per unit for another 20 MW while the same rate was given by Mahoba Solar (UP) Private Ltd for 50 GW. Sukhbir Agro Energy Ltd quoted Rs 3.20 per unit for 50 MW.

Talettutayi Solar Projects Five Private Ltd, NTPC Ltd and Eden Renewable Jasmin Private Ltd quoted Rs 3.21 for 50 MW, 20 MW and 50 MW, respectively. The Mahoba Solar (UP) Private Ltd quoted Rs 3.22 per unit for 50 MW.

Avaada Group firm Giriraj Renwables Private Ltd has quoted Rs 3.23 per unit for two package of 100 MW each but got only 50 MW in the auction.

The source said that the bench mark tariff for this auction was kept slightly higher at Rs 3.25 per unit by UPNEDA to attract investor in the solar energy projects in the state.

Generally, the benchmark tariff is kept below Rs 3 per unit in by the nodal agencies for conducting auctions for solar energy project across the country.

The source said the 500 MW solar energy capacities for which auction was concluded on Tuesday was out of the cancelled 1GW capacities and the UPNEDA is likely to come out with tender of another 500 GW capacities soon.