India’s solar tariff hits a new low of Rs 2 per unit amid aggressive bidding

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Photo by Angie Warren on Unsplash

The latest round of solar auctions in the country, conducted by state-run Solar Energy Corporation of India (SECI) for supplies to consumers in Rajasthan, discovered a new low tariff of Rs 2 per unit. The previous lowest tariff was Rs 2.36 per unit during the pan-India auctions held in July this year.

The winning developers bid aggressively to win contracts to set up a total capacity of 1,070 MW, marking a shift from the recent trend of solar tenders being under-subscribed.

Saudi Arabia-based Al Jomaih Energy and Water and Green Infra Wind Energy, a unit of Singapore-based Sembcorp Industries, quoted the lowest tariff for building 200 MW and 400 MW solar projects, respectively. State-run NTPC will be awarded the remaining capacity put up for auction, at Rs 2.01/unit. The key driver to low tariffs is having assured buyers of the power generated by the solar units.

During the last major solar tenders auctioned by SECI in February and July this year, most of the winning developers are backed by foreign capital. The renewable energy industry is one of the major FDI earners with the sector attracting $4.8 billion foreign capital till 2019 end since FY15.

The country has set a target to raise the capacity of installed renewable energy generation plants from the current level of 89 GW to 175 GW by the end of 2022. About 35 GW is under various stages of implementation and 30 GW under various stages of bidding. If the 45.7 GW of hydro and 6.8 GW of nuclear capacities are included in the renewables repertoire, the target under the Paris climate change accord of having 40 per cent of installed power generation capacity from non-fossil fuel sources can be achieved by 2022 itself.

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