The Gujarat Urja Vikas Nigam Limited (GUVNL) has scrapped the recently conducted auction for 700 MW of grid-connected solar photovoltaic projects in the state. This is the second time that the state has cancelled a completed solar auction.

According to one of the successful bidders in the auction, “All winning bidders had been invited for an interaction. GUVNL officials and Gujarat state government officials were present at the meeting. It was orally communicated to us that this auction has been cancelled.”

In December 2018, a lowest tariff of ₹2.84 (~$0.040)/kWh was quoted in the solar auction conducted by GUVNL for 700 MW of solar power projects. There was a difference of 40 paise (~$0.005)/kWh between the lowest tariff in this auction and the lowest tariff of ₹2.44 (~$0.033)/kWh that was quoted in GUVNL’s 500 MW grid-connected solar PV auction.

According to Mercom’s source, the reason provided for the cancellation was that the tariffs quoted were too high. “For once, the GUVNL accepted that it was not the developers’ fault that the tariff was high. The gathering was informed by the GUVNL that the tariff shot up due to high solar park charges,” the source said.

The GUVNL is likely to revise the solar park charges and retender the capacity. The official documented communication for the cancellation of this auction is yet to be conveyed.

“In spite of the GUVNL recognizing that high solar park charges were responsible for such tariffs, this has set a bad precedent. If due diligence was followed before issuing the tender, this issue wouldn’t have cropped up. Why were we (bidders) asked to participate when the implementing agency itself was unsure,” asked the source.

An official working for one of the other successful bidders said, “Reasons provided by the GUVNL do not make sense. If they knew solar park charges were high, they should have gone ahead with this auction and awarded the capacities to be developed as the money is going to state government coffers. This is a case where all the foreign companies have bid and they wanted some Indian players too. There is no other viable reason for the cancellation of this auction. In Uttar Pradesh, the projects are being awarded even if tariffs are above the ₹3 (~$0.042)/kWh mark as the state government and implementing agencies have followed due diligence and know what the generation is going to be. No implementing agency issues tender without due diligence, we are not happy with the reasons provided by the GUVNL.”

When contacted, GUVNL officials chose not to comment on the matter as no official document is out yet.

Another source raised some apprehensions saying that if the GUVNL introduces a tariff cap for this retender, there will be less participation from bidders.

Prior to this, in April 2018, the GUVNL had scrapped the auction for the development of 500 MW of grid-connected solar PV projects in the state citing high tariffs. The capacity was retendered and in September 2018, the auction was successfully concluded with the lowest tariff of ₹2.44 (~$0.0338)/kWh.

Image credit: RESOL