New Delhi: India’s solar power tariffs hit a record low of Rs2.36 per unit during a bid conducted by state run Solar Energy Corporation of India Ltd (SECI).
According to government officials, the lowest bid was placed by Spain’ Solarpack Corporación Tecnológica, S.A., with Italy's Enel Group’ Avikaran Surya India Private Ltd, Canadian firm’ AMP Solar Group’s India unit—AMP Energy Green Private Ltd, France’ EDEN Renewables and Ib Vogt Singapore Pte ltd placing the second lowest tariff bid of 2.37 per kilowatt-hour (kWh).
UK’ CDC Group-backed Ayana Renewable Power and Goldman Sachs backed ReNew Power placed the third lowest bid of ₹2.37 per unit each.
While the previously recorded low solar bid was of ₹2.44 per unit in May 2017, the bids for the 2000 mega watt (MW) capacity were called in the backdrop of India’s move to impose basic customs duty (BCD) on imported solar cells, modules, and inverters from 1 August and its economy undergoing a two-month lockdown, the world’s largest and strictest, to contain the virus that originated in Wuhan, China.
“Heartening to note that majority of the winners are foreign companies, in true spirit of Invest in India call by Hon'ble @PMOIndia. This showcases India as an attractive investment destination," power and new and renewable energy minister Raj Kumar Singh said in a tweet.
While any tariff barrier will lead to an increase in electricity tariffs, the National Democratic Alliance (NDA) government plans to allow a pass-through in power tariffs for projects awarded before the basic customs duty is imposed. Going forward India plans to impose more tariff and non-tariff barriers to promote domestic manufacturing.
“Covid-19 fails to halt the aggressive RE growth story, with a historically lowest tariff of Rs.2.36/unit achieved in 2000 MW ISTS( Tranche-IX) solar bid conducted by @SECI_Ltd," Singh said in another tweet.
These low tariff bids come in the backdrop of the Andhra Pradesh scrapping the power purchase agreements (PPAs) signed by the previous Telugu Desam Party-led government, that led to an outcry by global investors forcing New Delhi to propose setting up an Electricity Contract Enforcement Authority to enforce PPAs in the draft amendments to the Electricity Act, 2003.
The bids comes in the backdrop of debt financing for green energy projects drying up with large Indian banks declining to fund projects that have committed to sell power at less than Rs3 per unit. The banks have been wary of lending to developers as they suspect the viability of projects that have agreed to sell power at rock-bottom tariffs.
This also assumes importance given that the rapid pace of clean energy capacity addition by India. Clean energy projects now account for more than a fifth of India’s installed power generation capacity. India has 34.6 GW of solar power, with an aim to have 100 GW of solar capacity by 2022. The country is seeking additional clean energy investment of around $80 billion till 2022, growing more than threefold to $250 billion during 2023-30.
Green shoots had sprouted in the economy, since the country began easing restrictions after a lengthy lockdown. India started unlocking its economy in phases beginning 8 June, allowing more economic activity.
“The results were declared within seven days of the bid opening. The last date for bid submission was 22 June, with the bids being opened on 23 June," said a government official cited above requesting anonymity.