 "solar power")
Falling solar equipment prices and increased participation of foreign and private equity-backed firms have dragged down the solar tariff in the country to a record low of Rs 2 per unit. This fall comes at a time when Indian solar power developers are facing import restrictions on Chinese solar equipment.
In an auction held by Solar Energy Corporation of India (SECI) for 1,070-Mw solar power projects on Monday, Saudi Arabia-based Al Jomaih Energy and Water, and Green Infra Wind Energy, a unit of Singapore-based Sembcorp Industries, quoted the lowest rate for 200-Mw and 400-Mw capacity projects, respectively.
IDFC Securities on Tuesday said purchase security is one reason for such low bids. “The bid is for setting up solar power plants in Rajasthan and the power purchase agreement has been signed with the state’s power distribution companies (discoms),” it said in a note.
SECI is a fully owned subsidiary of the Ministry of New and Renewable Energy which invites bids for renewable projects in the country.
Al-Jomaid Energy & Water is a private limited company headquartered in Dammam, Saudi Arabia, and owned by Saudi-based enterprises. The Indian entity — Aljomaih Energy And Water India Pvt Ltd — was incorporated in September this year.
State-owned NTPC also bid aggressively and was the second-lowest bidder having quoted Rs 2.01/unit. It will be awarded the balance capacity as the bid followed a bucket-fill method where the lowest offer is first accepted and the remaining capacity is offered to the next lowest bidder.
This is the first such tender where foreign players have won majority capacity. There were 14 bidders in fray ranging from Tata Power, Vector Green, and Sprng Energy to state-owned SJVN.
“The easy access to foreign capital for the two companies that won the tender seems to have prompted them to bid so low,” said a sector expert.
The last lowest tariff discovered in India was in June this year when Spanish renewable Solarpack Corporation bid Rs 2.36 per unit for constructing a 300 Mw solar power project in a tender floated by SECI. The project location was pan-Indian.
Before this, the lowest solar tariff in India was Rs 2.44/unit by ACME Solar in 2018 for a 600-Mw project to be set up in Rajasthan. The project is under litigation as ACME wants to cancel it.
IDFC Securities also said another reason for such low solar prices is that developers are looking to deploy “bi-facial modules and single axis trackers”.
The price of all types of photovoltaic solar modules has fallen to 11-20 per cent in China since January. The price of bi-facial solar module specifically has come down to $0.31 per watt, in October. Standard and low-cost modules from China are priced at a record low $0.20/watt and $0.15/watt.
India is one of the largest importers of Chinese solar panels with close to 80 per cent of current solar capacity built on Chinese solar cells and modules. However, as part of the Atmanirbhar Bharat campaign and Make-in-India push, the Ministry of Power is looking at restricting import of solar equipment. It has proposed a basic Customs duty on imported solar panel. The Directorate of Safeguard Duty recently extended 15 per cent safeguard duty on solar imports from China for a year.
Industry executives said most of the solar power project developers would plan to import after July next year when safeguard duty expires. “Even for this tender, the commissioning timeline is 18 months so the developers can import after July 2021,” said an executive.
India has set an ambitious target to reach 175 Gw of renewable energy capacity by 2022. Solar power will contribute 100Gw to this.
Under the Paris climate change agreement, India has committed that 40 per cent of its energy demand would come from clean energy sources by 2030.
