According to reports, solar power tariff is set to witness another round of an aggressive bidding war by leading domestic and global firms on Thursday when the world’s largest solar power plant coming up in Madhya Pradesh goes for the second round of auction.
Three units of 250 mega watt (MW) each in the project at Rewa district will go under the hammer in a reverse auction starting with a tariff of Rs3.59, Rs3.62 and Rs3.64 a unit, respectively, for the first year.
Rewa Ultra Mega Power Ltd, a joint venture between Solar Energy Corp. of India Ltd and Madhya Pradesh Urja Vikas Nigam Ltd is holding the reverse auction for awarding the project to the bidder willing to sell power at the lowest tariff.
“The Rs4 a unit barrier has been breached by the Rewa project even before the auction has begun and with no subsidy. The tariff can only go lower from here,” a person with direct knowledge of the development said, on the condition of anonymity.
Twenty leading firms, including Italy’s Enel Green Power SpA, SoftBank-promoted SBG Cleantech Ltd, Canadian Solar Energy Holding, Singapore3 Pte Ltd and Green Infra Wind Power Project Ltd, promoted by Sembcorp Industries Ltd, are in the fray.
Hero Future Energies Pvt. Ltd, ReNew Power Ventures Pvt. Ltd, Azure Power Global Ltd, Aditya Birla Renewables Ltd, Mahindra Renewables Pvt. Ltd and Orange Renewable Power Ltd are among the bidders.
India has over 8.5 gigawatts (GW) of solar power capacity and is targeting 100GW by 2022. Low cost of solar panels and concessional value-added tax on them have helped in lowering the cost of setting up solar power projects. These projects take less than a year for commissioning, unlike large thermal power plants, which take many years for construction. Many large manufacturing and services firms are also setting up captive solar power plants as industrial power tariff is higher than solar power due to the cross-subsidy burden.
Solar power tariff, which was above Rs12 a unit in 2010, has gradually declined. In the auction in November, projects were awarded to sell power at Rs3 a unit for 25 years in Uttarakhand, Himachal Pradesh and Puducherry.