In a close fight during the first reverse auction for solar projects held on the online platform, 10 bidders quoted below Rs 5 per unit. Around 15 companies quoted below Rs 5.5 a unit, which was hailed to be the average tariff for solar power this year by the government.
Solar power would be bundled with thermal power from state-owned National Thermal Power Corporation (NTPC), which will further bring down the final sale price to Rs 3.5 a unit — the lowest ever — said a person close to the development.
The bundled power would be procured by Andhra Pradesh.
The bidding process, which started with 30 players on Tuesday morning, ran well beyond midnight. The ones racing closely were SoftBank’s SBG Cleantech, which had put its debut bid in India, Yarrow Infra, Reliance CleanGen, Sumant Sinha’s ReNew Power, ACME Solar, Finland’s Fortum and South African major SolaireDirect.
Talking to Business Standard , Pashupathy Gopalan, president and managing director of SunEdison Asia-Pacific, said this bid would be the beginning of solar revolution in India. “These low bids are the result of the tireless efforts of the minister (Piyush Goyal) and the ministry. They took a lot of feedback from the industry, assured the investors about the transmission and evacuation of power and land availability for the project. Then, an entity like NTPC is also involved. As the risks were significantly reduced, all this was factored in the low bids that were quoted,” said Gopalan.
The lowest solar bid earlier had come for Madhya Pradesh at Rs 5.05 a unit from Malaysia-based Sky Power. “There is no doubt about these rates being very aggressive. The assumptions for cost of equipment, cost and other terms of finance, return expectations and presumed future benefits through securitisation of assets and/or perceived premium in valuations in case of an exit are all being considered at levels that are more aggressive than what we would generally assume,” said Jasmeet Khurana, associate director — consulting at Bridge to India.
Government sources said the estimated cost of the projects is Rs 2,500 crore and there would be no escalation in tariff for the period of power purchase agreement of 25 years. A solar park is ideally built by more than one power producer and the solar power is, then, bundled and sold at an average price.
However, SunEdison’s would build it single-handedly. “We are grateful to the government for giving us this opportunity through a transparent process. This proves that solar is an integral part of the energy mix and policy of the government. Solar power is now cheaper than thermal, even all other forms of energy production,” said Gopalan.
“All other things remaining the same, the upcoming bids in Rajasthan may be even more aggressive given that the solar park charges in the state are lower than those in Andhra Pradesh,” said Khurana.
The government has increased solar power capacity addition targets five times to 100,000 Mw by 2022. Of this, nearly 60,000 Mw would be met through grid-connected projects.