Solar power tariff touches record low of Rs4.63 with SunEdison’s aggressive bid

Mumbai: Solar power tariff in India touched an all-time low of Rs.4.63 per KWh after a huge number of domestic and multinational companies bid aggressively for the 500 megawatt (MW) of capacity offered under the Jawaharlal Nehru National Solar Mission in Andhra Pradesh on Tuesday.

“SunEdison quoted tariff of Rs.4.63 per KWh,” Tarun Kapoor, joint secretary at India’s ministry of new and renewable Energy, says in mobile-phone text message, reported Bloomberg.

The day two of bidding, which began on the afternoon of 3 November and ended well past midnight on 4 November, closed with SunEdison Inc., the world’s largest renewable energy company, quoting the lowest tariff for the entire capacity of 500 MW, according to multiple people aware of the matter. A SunEdison spokesperson was not immediately available for a comment.

Japan-based telecom and Internet major Softbank Corp. bid competitively at Rs.4.80 per kWh while another undisclosed company bid for a 50 MW project at Rs.4.79 per KWh on Tuesday evening. The online bids were on a no-names basis.

Of the 28 companies that moved to the second round of this bidding process, nine companies, including Italy’s Enel Green Power SpA, Reliance Power Ltd, ReNew Power Ventures Pvt. Ltd, Solar Arise, Acme Solar and Orange Renewable Power, ended their bids under Rs.5 per kWh. Other bidders included Welspun Renewables, Trina Solar and First Solar.

The aggressive bid from SunEdison came as a surprise, as the company, which is looking to consolidate its business globally and cut costs after a series of big acquisitions, is likely to back out of a deal to buy Singapore-based Continuum Wind Energy, which has assets in India, Mint reported on 22 October.

SoftBank in June announced a partnership with India’s Bharti Enterprises Ltd and Taiwan-based Foxconn Technology Group to form a joint venture, SBG Cleantech Ltd, a clean energy company in India. It is the first central government-led allocation under India’s National Solar Mission since Prime Minister Narendra Modi came to power.

On Monday, bids were submitted for over 5.5 gigawatt (GW) by 30 developers with tariffs ranging between Rs.5.21 per kWh and Rs.6.45 per kWh. India’s strategy of a foreign currency-denominated tariff plan for solar energy is aimed at providing solar power at a new low of Rs.4.75 per unit to the states, Mint reported in October.

The National Democratic Alliance (NDA) government has pushed renewable energy to the top of its energy security agenda. While India has a solar generation capacity of 2,900MW, the BJP-led government has substantially revised an earlier target of achieving 20,000 MW capacity by 2022 to 100,000 MW. This would require an investment of around Rs.6.5 trillion over five years. Of the total 100,000 MW of solar power capacity planned by 2022, 20,000 MW will come from solar parks and 40,000 MW each from roof-top and distributed generation projects.

The viability of such an aggressive tariff is being questioned by the industry. The upcoming bids in Rajasthan may be even more aggressive given that the solar park charges in the state are lower than those in Andhra Pradesh. “We acknowledge that there is no doubt about these tariffs being very aggressive. The assumptions for cost of equipment, cost and other terms of finance, return expectations and presumed future benefits through securitization of assets and/or perceived premium in valuations in case of an exit are all being considered at levels that are more aggressive than what we would generally assume,” said Jasmeet Khurana, consultant, Bridge to India, a boutique consultancy and and knowledge provider in the Indian cleantech market.