India's bid for 2GW solar energy creates a new low electricity price 2020-07-06

The latest auction of Solar Energy Corporation of India (SECI) set a record low price of INR 2.36 (US $0.0313) / kWh.

The target of the auction is the 2gw inter state transmission system (ists) grid connected solar project (tranche IX). The price is about 3.3% lower than the previous lowest offer of INR 2.44 (US $0.032) / kWh.

In SECI's two auctions, acme quoted a price of INR 2.44 (approximately US $0.032) / kwh; SECI auctioned the 3gw project in one auction and the other in July 2018, auctioning the 2gw ists grid connected solar project.

Solarpack CORPORACION tecnologica SA quoted L1 (minimum) tariff. Among them, avikaran Surya India Private Limited (Enel green power), amp energy green private limited, Eden renewables and IB Vogt Singapore private limited offered the second lowest price of INR 2.37 (about US $0.0314) / kWh.

Amp energy won the bid for 100MW project, and other companies won 300MW project respectively.

Renew power private limited offered INR 2.38 (approximately US $0.0316) / kWh for the 1.2 GW project, but only 400 MW was awarded.

A SECI official confirmed the results of the auction, saying: "we are pleased to see some companies participate in the auction for the first time, and most of the winning bidders are foreign enterprises, which is encouraging. Of course, electricity prices are also very low, which is quite good. "

The successful bidders are solarpack (Spain), energy green power (Italy), amp energy (Canada), Eden renewable (USA), IB Vogt (Germany), Ayana renewable (UK) and renew power (India).

Tata power renewable energy offered INR 2.39 (approximately US $0.0317) / kWh for the 600MW project and INR 2.46 (US $0.0327) / kWh for the 400MW project by O2 power SG private limited.

Reasons for low bid

Mercom interviewed several developers to understand the reasons behind their aggressive bidding. Developers believe that the benchmark tariff on these projects will be exempted or passed on, and even the model and manufacturer approval list (ALMM) will no longer apply. It is generally believed that the price of solar modules will fall sharply, and the forward contract of solar modules may further reduce the price.

This may be one of the last auctions in which developers are clearly informed of the ist exemption, and the government has yet to announce a decision to extend the exemption.

Compared with SECI's 1.2gw tranche VIII solar project, the electricity price is reduced by about 5.6%.

Raj Prabhu, CEO of mercom capital group, said, "the low bid shows the market pricing level of large solar projects without component tariffs and using ALMM lists. Once tariffs and other regulations are imposed, it is impossible for government agencies to expect such pricing levels to happen again. As we said in the last webinar, auctions held before July 29 have advantages in attracting lower priced bids.

SECI issued the project selection requirements in March 2020. According to the bidding documents, the applicant can submit a single bidding scheme of 50mw-2gw in multiples of 10MW. The minimum capacity of each project is 50MW and the maximum capacity is 300MW. The total capacity that can be allocated to a single bidder is 2gw.

Mercom's recent report shows that many developers are interested in the bidding. The over bid volume reached 3.28gw. New power ranked first in the list of 12 bidders.

Closely by NTPC Limited's 1.18gw. Tata power renewable energy company's 600MW, O2 power's 400MW, Eden renewables, azure power, solarpack, Enel green power, Ayana renewables and IB Vogt's 300MW, and amp Solar's 100MW.

According to mercom India research, so far, SECI has tendered 16.7gw of ist solar energy projects under tranche I-X and auctioned about 8.84gw projects under the tranche I-VIII plan.

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