Three companies backed by global financiers have bagged the tenders to build 750 MW of solar power projects in Kadapa, Andhra Pradesh, with the lowest bid under the reverse auction process coming in at Rs 2.7 a unit.
While these auctions were held on Friday, earlier last week, the reverse auction for 2,000 MW capacity haft discovered tariff of Rs 2.44 per unit, which matched the lowest ever rate that was found in May 2017 for Rajasthan’s Bhadla projects.
Before the latest two auctions, an impending threat of hefty 70% safeguard duties on solar cells and panels had pushed up the tariffs to as high as Rs 3.54 per unit, giving credence to the analysts’ fears that the lower rates would be unsustainable.
According to sources, SoftBank’s SB Energy and UK private equity firm’s Sprng Energy won tenders for 250 MW each for Kadapa projects by quoting the lowest tariff of Rs 2.70 a unit. Ayana Renewable Power, which is backed by the UK government’s CDC Group was awarded the remaining 250 MW capacity for Rs 2.71 a unit.
The auction was conducted by the Solar Energy Corporation of India, which would sign 25-year power purchase agreement with these firms and sell the electricity to various state-owned distribution companies.
Though the latest Kadapa tariff is higher than the all-time low solar rate of Rs 2.44 per unit, it is still lower than the Rs 2.72 per unit price discovered for equal capacity of generation plants in the same solar park in the auctions conducted by NTPC in May. The development indicates that the industry is gradually getting over the impending fears from proposed imposition of 70% safeguard duty on imported solar products, which can raise capital costs for solar plant developers.