The Solar Energy Corporation of India’s (SECI) latest auction saw a record low bid of ₹2.36 (~$0.0313)/kWh.
The auction was conducted for 2 GW of the interstate transmission system (ISTS) connected solar projects (Tranche IX). This is about 3.3% lower than the previous lowest quoted tariff of ₹2.44 (~$0.032)/kWh. ACME had quoted a tariff of ₹2.44 (~$0.032)/kWh in two of SECI’s auctions; one for 3 GW and another for 2 GW of ISTS-connected solar projects held in July 2018.
The L1 (lowest) tariff was quoted by Solarpack Corporacion Tecnologica SA, Avikaran Surya India Private Limited (Enel Green Power), Amp Energy Green Private Limited, Eden Renewables, and ib vogt Singapore Private Limited quoted the second-lowest tariff of ₹2.37 (~$0.0314)/kWh.
AMP Energy won 100 MW of projects, while the other companies won 300 MW of projects each.
Meanwhile, ReNew Power Private Limited quoted ₹2.38 (~$0.0316)/kWh for 1.2 GW of projects but won only 400 MW under the bucket filling method.
A SECI official confirmed the auction results stating that “We are happy to note a few first-timers and a majority of the winners are foreign companies, which is encouraging. And of course, the tariff is low, which is very good.”
The winning bidders were from seven different countries; Solarpack (Spain), Enel Green Power (Italy), Amp Energy (Canada), Eden Renewables (France), ib vogt (Germany), Ayana Renewable (United Kingdom) and ReNew Power (India).
Tata Power Renewable Energy quoted a tariff of ₹2.39 (~$0.0317)/kWh for 600 MW of projects, and O2 Power SG Private Limited quoted ₹2.46 (~$0.0327)/kWh for 400 MW but did not win any capacity.
Low bid reasons
Mercom spoke to several developers to understand the reason behind the aggressive bids. Developers believe that the basic customs duty for these projects will be exempted or see a passthrough, and even the Approved List of Models and Manufacturers (ALMM) will not be applicable. The general belief is that the price of solar modules will see a steep fall, and forward contracts for the modules may bring down the price even further.
This could also be one of the last auctions where developers have clarity on the ISTS waiver. The government is yet to announce its decision on the waiver extension.
Compared to SECI’s Tranche VIII auction for 1.2 GW of solar projects, tariffs were lower by around 5.6%.
“This low bid is an indication of where the market pricing is for the large-scale solar projects without duties on modules and ALMM. Government agencies cannot expect this level of pricing again once duties and other regulations are imposed,” said Raj Prabhu, CEO of Mercom Capital Group. “We said in our last webinar that any auctions conducted before July 29th will have an advantage and can attract lower bids.”
SECI had issued a request for selection for the projects in March 2020. According to the tender documents, applicants could submit a single bid for quantities between 50 MW and 2 GW in multiples of 10 MW. The minimum project capacity per project is 50 MW, and the maximum is 300 MW. The total capacity that can be allocated to a single bidder is 2 GW.
Recently, Mercom reported that this tender garnered a lot of interest from developers. The tender was oversubscribed by 3.28 GW. ReNew Power placed bids for 1.2 GW, which was the highest bid capacity of the total 12 bidders on the list, followed closely by NTPC Limited, that quoted 1.18 GW. Tata Power Renewable Energy bid for 600 MW of projects, O2 Power for 400 MW, while Eden Renewables, Azure Power, SolarPack, Enel Green Power, Ayana Renewables, and ib vogt placed bids for 300 MW each. Meanwhile, Amp Solar placed bids for 100 MW.
According to Mercom India Research, SECI has so far tendered 16.7 GW of ISTS solar projects under tranche I to X; and auctioned around 8.84 GW under tranche I to Tranche VIII.
Image credit: Renew Power
Correction: This article has been corrected to reflect that Eden is a French company which was erroneously reported as U.S.-based
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.