Indian government agencies announced tenders for more than 9.5 GW and auctions for 6 GW in 2017, according to Mercom’s India Solar Tender Tracker.
The year began on a high note with a spate of project announcements in January that included approximately 1 GW of solar tenders and 500 MW of solar auctions. However, tender cancellations drastically reduced the actual capacity tendered in January to approximately 200 MW. In all, over 700 MW of tenders and 1.3 GW of auctions materialized in Q1 2017.
As the year progressed, several legal, regulatory, and market forces conspired to slow down industry activity. These matters included the anti-dumping investigation, increasing Chinese module prices, confusion over the Goods and Services Tax (GST), Power Purchase Agreement (PPA) renegotiations, and the recommendation for a safeguard duty.
The second quarter (Q2) of 2017 saw the highest tender activity following extremely low Chinese module prices, registering about 4 GW of tenders and approximately 2.5 GW of solar auctions.
Activity slowed in the third quarter (Q3) of the year, with only 1.7 GW tendered and 1.2 GW auctioned.
Tender activity picked up in the months of May and June right after the Bhadla auction which saw record-low bids. However, tender announcements fell into a downward spiral after that historic auction as government agencies and distribution companies (DISCOMs), after seeing the solar tariff fall below coal prices, began renegotiating PPAs with project developers in an effort to secure the same low Bhadla tariff rate.
In all, 2.6 GW of tenders were cancelled in 2017 due to various reasons as government agencies began amending their PPA frameworks in search of better deals.
After the lull in tender activity that followed the Bhadla auction, the Ministry of New and Renewable Energy (MNRE) revealed plans in November to announce 17 GW of solar tenders, starting in December 2017, to help the government reach its goal of installing 100 GW of solar capacity by 2022. Under the plan, over 3 GW of capacity was tendered in December 2017 and the agency said it was planning to issue another 3 GW in January 2018 (5.5 GW was actually tendered), followed by 5 GW in February 2018, and 6 GW in March 2018.
In Q4 2017, a total of Over 3 GW of solar were tendered and over 1 GW auctioned.
Auction activity was weak during 2017 with only June witnessing more than 1 GW. The decline in auction announcements came after the anti-dumping investigation was launched and the industry was left to wonder whether projects that were already won or under construction would have to pay higher tariffs on imported solar components. Moreover, the confusion about the GST also played a spoilsport as the government let months pass before it clarified the tax implications for solar components, creating a drag on industry activity.
Here is a quick recap of all the major tenders and auctions that took place in the year 2017:
The Gujarat Urja Vikas Nigam Limited (GUVNL) tendered 500 MW of solar to be installed across the state of Gujarat to meet its RPO.
To leverage the waiver of inter-state transmission charges, the Solar Energy Corporation of India (SECI) tendered 500 MW of solar at the Bhadla Phase-III Solar Park under the National Solar Mission (NSM) Phase-II Batch-IV Tranche-XI and 250 MW of solar at the Bhadla Phase-IV Solar Park under NSM Phase-II Batch-IV Tranche-XII.
The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) tendered 1,500 MW of solar in Tamil Nadu to meet the state’s RPO and peak demand.
The National Thermal Power Corporation (NTPC) retendered 1,000 MW of solar in March in two separate announcements, ultimately tendering the 750 MW for the Pavagada Solar Park in Karnataka under the Open Category and 250 MW for the Pavagada Solar Park under the Domestic Content Requirement (DCR) category.
The Solar Energy Corporation of India (SECI) auctioned 500 MW of solar in the Bhadla Phase-III Solar Park auction. 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 to develop a solar rooftop project under the RESCO model is ₹2.20 (~$0.034)/kWh. Mundra Solar PV quoted the tariff to set up a solar rooftop project in Andaman & Nicobar in response to the Solar Energy Corporation of India’s (SECI) 500 MW tender to set up rooftop solar projects across various states in India.
The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) auctioned 1,500 MW of solar in June. The lowest tariff quoted was ₹3.47 (~$0.05364)/unit.
A total of 750 MW solar was auctioned for the Bhadla Solar Park in May. The total comprised 500 MW of solar auctioned in the Bhadla Phase-III Solar Park, and another 250 MW auctioned in the Bhadla Phase-IV Solar Park.