The government will continue to cancel solar and wind auctions if it finds that the prices discovered through reverse bidding are high.
“We will accept bids which are reasonable. If we come across bids which we consider to be excessive, we will cancel them,” said R.K. Singh, Minister of Power, according to a PTI report. He was speaking at a curtain raiser press conference of 2nd Global RE-INVEST.
But the only catch here is that no one knows which tariff is going to be considered unreasonable by the government.
Recently, both central and state agencies cancelled approximately 4 GW of solar auctions. For example, Solar Energy Corporation of India (SECI) cancelled 2.4 GW out of a 3 GW Interstate Transmission System (ISTS) connected solar auction held in July 2018. In the auction, ACME had emerged as the lowest (L1) bidder by quoting a tariff of Rs. 2.44/kWh to develop 600 MW. A bid as low as Rs. 2.64/kWh quoted by Azure Power, the second lowest bidder to develop 300 MW was also cancelled.
Agencies have stated that high tariffs and wide gaps between winning bids are the reasons for cancelling these auctions.
However, two recent developments, imposition of 25 percent safeguard duty and depreciation of rupee, will only make the task of keeping the tariff low difficult in short to medium term.
On the continuation of arbitrary cancellation of auctions, one of the developers said, “MNRE is bent upon killing this market which was in a good shape till now and people were enthusiastic. We are living through the toughest moment in the history of NSM till now. Foreign players have already started rethinking about investing in renewable space and recent unsubstantiated allegation by the minister himself has dented their confidence.”
