New Delhi: Tariffs for solar power touched Rs2.59 per unit in a tender called by state-run NTPC Ltd for 2,000 megawatts (MW) on Tuesday.

Acme Solar Holdings, Shapoorji Pallonji Infrastructure Capital Co. Ltd and Azure Power bid 2.59 per kilo-watt hour (kWh) to win contracts to build plants of 600 MW, 500 MW and 300 MW each respectively, according to two people aware of the development.

SoftBank-owned SB Energy bid 2.60 per kWh at which it will sell solar power, to win contracts to develop 600 MW. This was the first interstate transmission system (ISTS)-connected solar auction conducted by NTPC Ltd, India’s largest power generation utility, with these plants to be commissioned two years after signing of the power purchase agreement.

India achieved a record low solar power tariff of 2.44 per unit in May 2017. Earlier last month, tariffs again touched 2.44 per unit in an auction conducted by state-run Solar Energy Corp. of India.

India’s finance ministry imposed safeguard duty on 30 July on the recommendations of Directorate General of Trade Remedies. A safeguard duty of 25% has been imposed for the first year, followed by a 5% reduction for the first six months of the second year to 20%. A duty of 15% has been levied for the last six months of the second year.

The Tuesday bids came in the backdrop of the government temporarily suspending the 25% safeguard duty on solar cells and modules imported from China and Malaysia. In a letter to the Chief Commissioner of Customs dated 13 August, the government asked customs officials “not to insist on payment of safeguard duty, for the time being". The latest notification recognizes the stay till 20 August on the duty that the Odisha high court had ordered on 25 July.

When contacted, an NTPC spokesperson declined comment. The winning bidders couldn’t be immediately reached for their comments.

NTPC Ltd, India’s largest utility had deferred the tender by a week. The postponement of reverse auction by India’s largest power generation utility was triggered by concerns among pre-qualified bidders on the impact of the safeguard duty on their financial models.

With modules making up nearly 60% of a solar power project’s total cost, a majority of Indian developers have placed orders with Chinese manufacturers because of their competitive pricing. For China’s solar module manufacturing capacity, estimated to be around 70 gigawatts (GW) per year, the major markets are the US, India and China itself.

India is confident of achieving its ambitious target of 100 GW solar power by 2022 despite the imposition of a safeguard duty on imported solar components, Anand Kumar, secretary in the ministry of new and renewable energy had earlier told Mint.

Kumar said that the safeguard duty won’t hit India’s solar plans as developers will factor the higher cost in their bids. India had 21.65 GW of solar capacity as of end-March.

India, the world’s third-largest energy consumer after the US and China, is running the world’s largest clean energy programme with an aim of having 175 GW of clean energy capacity by 2022 as part of its global climate change commitments. Its plan to add 100 GW of solar capacity by 2022 includes 40 GW from rooftop projects.

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