In the 500 MW Bhadla solar park auction that concluded today, Hero Future Energies won 300 MW at a winning bid of ₹2.47 (~$0.0380)/kWh followed by Softbank Group which won 200 MW at the second lowest bid of ₹2.48 (~$0.0382)/kWh.

The lowest quoted tariff of ₹2.47 (~$0.0380)/kWh is just 1 percent higher than the previous low solar tariff of ₹2.44 (~$0.0370)/kWh quoted in Bhadla Phase-III and Phase-IV Solar Park auctions.

An SECI official confirmed to Mercom that the L1 bidder was Hero Future Energies and the L2 bidder was Softbank.

The tariff quoted was between a range of ₹3.29 (~$0.0507) and ₹2.47 (~$0.0380), a difference of 33 percent.

“Nobody is sure if the winning bid is viable, which is scary. ACME won with a record low bid of ₹2.44 (~$0.037)/kWh in the Bhadla Phase-III auction conducted in May, but has found it very challenging to close financing for that project. Market dynamics changed since then with Chinese module prices going up instead of down due to China demand and the Suniva anti-dumping case. All of a sudden, project economics became shaky. By the time components are procured, if module prices fall, the winners will look like geniuses. If prices stay up or rise further, they will struggle,” said Raj Prabhu, CEO of Mercom Capital Group.

Ten companies participated in the bidding. The auction was oversubscribed by six times with firms bidding for 3,100 MW against the tendered 500 MW.

After the extension of the Inter-State Transmission (ISTS) waiver, the Solar Energy Corporation of India (SECI) tendered a total of 750 MW of solar at the Bhadla Solar Park in Rajasthan, in June 2017. This 500 MW was part of the capacity tendered in June.

These projects must be complete on or before December 31, 2019, to be able to use the ISTS waiver. The power generated from these projects will be supplied to Uttar Pradesh to fulfill demand.

The low bids are a surprise considering the uncertainties plaguing the Indian solar sector. Bids kept falling in auctions until May, but have since flattened out in tandem with the Chinese module prices.

“The low bids show that the developers are really desperate to win a project even if the returns are not that great. Tender and auction activity has continued to fall in recent months. Developers are looking to keep their teams busy who they hired in anticipation that the government would continue to auction at a brisk pace,” said Prabhu.

However, MNRE has said that it is preparing to announce a spate of tenders for solar projects in the coming four months, starting December 2017. Under the plan, the MNRE says it will work alongside states to announce the tenders needed to reach 20 GW of ground-mounted capacity in solar parks in the 2017-18 fiscal year. Of the 20 GW, 3 GW is set to be tendered in December 2017, followed by 3 GW in January 2018, 5 GW in February 2018, and 6 GW in March 2018. Another 30 GW is expected to be tendered in 2018-19 with 30 GW to follow in 2019-20. With nine days left in the month there are no signs of the 3 GW tender yet.

Image credit: Mercom India