A low tariff of ₹2.65 (~$0.0413)/kWh was quoted in the recently held Gujarat Urja Vikas Nigam Limited (GUVNL) 500 MW solar auction with aggressive bidding by Gujarat government agencies.

The GUVNL tender was oversubscribed by almost four times as firms responded with technical bids of over 2 GW.

The auction winners were, GRT Jewellers India Private Limited who quoted the lowest tariff of ₹2.65 (~$0.0413)/kWh to develop 90 MW of solar; Gujarat State Electricity Corporation Limited (GSECL) and Gujarat Industries Power Company Limited (GIPCL) quoted a tariff of ₹2.66 (~$0.0415)/kWh and ₹2.67 (~$0.0417)/kWh to develop 75 MW of solar each; and Azure Power quoted a tariff of ₹2.67 (~$0.0417)/kWh to develop 350 MW, but was awarded 260 MW.

GUVNL 500 MW Auction Results

The GUVNL tendered a total of 500 MW, with 425 MW open for all and 75 MW to be allotted for Central PSUs, State PSUs, and Government controlled organizations that are willing to execute power purchase agreements (PPAs) with GUVNL at the lowest tariff price.

When asked about the winning bidder of the 75 MW, the General Manager (IPP), GUVNL, told Mercom, “We could have awarded the allocated 75 MW to either GSECL or GIPCL as they are both state PSUs, but both of them participated as general bidders in the open category, winning 75 MW each based on their low tariff price.”

One auction participant said “It is not fair for government agencies to bid against private solar developers in auctions. In fact, the government agencies were responsible in pushing down the tariffs to these low levels and we had no choice but to compete.”

The GUVNL, GM (IPP), also confirmed that Azure Power had bid for 350 MW, but was awarded 260 MW – the balance of the 500 MW auction – after the first three lowest bidders. The GM (IPP), GUVNL, also said, the auction went as expected and tariffs quoted have not come as a surprise even in these troubled times.

The developers will enter into power purchase agreements (PPAs) within one month from the date of issue of Letter of Award (LoA) and the PPA will be executed between GUVNL and selected bidders for a period of 25 years from the date of commercial opening. The successful bidders have 18 months to commission the projects, added the GM (IPP), GUVNL.

Tata Power Renewable Energy Limited (TPREL), ReNew Power were other big solar players that participated in the auction.

Victor Liang of JA Solar said, “If we look at the GUVNL bids, they have gone low as developers have made an assumption that the module prices will be $0.26-0.27/W. But, these developers might get into trouble as there is a trend of module prices increasing. There is a rush for modules in the U.S. and Chinese markets. So why will suppliers ship to Indian developers at a much lower rate and incur less profits?”

This is the third lowest solar winning in India and comes at a time when there is a lot of uncertainty swirling around in the market.

“Gujarat DISCOMs have the best credit ratings in the country and that may have helped alleviate some of the risk associated with the projects leading to lower bids. That said, developers are rolling the dice and hoping that the market and price trend reverses by the time they procure components. These results will further embolden DISCOMS to push developers to quote lower and lower,” said Raj Prabhu, CEO of Mercom Capital Group.

Lowest Solar Bids in Reverse Auction in India

Image credit: Azure Power