Government lines up 2,000 MW solar power auction

To achieve the target of achieving 100 gigawatt (GW) of installed solar energy capacity by 2022, the Central government has invited tenders for 2,000 MW of solar power projects connected to the inter-state transmission system. The Solar Energy Corporation of (SECI) would sign 25-year power purchase agreements (PPAs) with the winning bidders and sell the power to electricity distribution utilities (discoms). The ceiling tariff has been set at Rs 2.93 per unit. The reverse auctions would be conducted for eight projects of 250 MW each. A company can bid for a maximum capacity of 500 MW. Acquiring land, permissions and other infrastructure to connect the upcoming solar projects to the electricity grid would be the responsibility of the developer.

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After a brief lull in solar tendering and auctioning activities, the first month of January looks bright for the solar industry, with SECI calling for tenders of more than 3,200 MW of solar parks (275 MW in Uttar Pradesh, 200 MW in Karnataka and the current 2,000 MW inter-state). Power and renewable energy minister RK Singh had in November announced the break-up of his action plan for completing 80 GW of solar auctions by FY20, leaving a margin of two years to complete the projects by 2022. According to that agenda, another 11 GW of solar tenders can be expected by March 2018.

It remains to be seen how the solar industry reacts to the auctions, especially in the wake of director general safeguards’ proposal to impose provisional 70% safeguard duty on solar cell imports for 200 days. With a drastic fall in renewable energy, tariffs already hurting their margins, the industry, majorly dependent on imports, is expected to resist quoting unviable low rates in order to win projects. Currently, the lowest solar tariff is Rs 2.44 per unit, discovered in May at the reverse auctions for solar plants in Rajasthan’s Bhadla.