Tariffs of manufacturing-linked solar projects reduced by 13%

The tariff of Rs 2.92/ kilowatt-hour (kWh) discovered in the manufacturing-linked solar projects auction held in January last year has now been reduced to Rs2.54 per kWh, a redu tion of 12.92 per cent.

Adani Green Energy (AGEL) and Azure Power had won the first of its kind manufacturing-linked solar tender floated by Solar Energy Corporation of India (SECI). Adani and Azure had won the bid to develop 2,000 megawatt (MW) of projects with 500 MW of manufacturing capacity each. The winning tariff quoted by both the companies was Rs2.92/kWh. The ceiling tariff for the tender was fixed at Rs2.93/kWh.

According to the project timeline, SECI was to sign the power purchase agreement (PPA) for 4 GW by the financial year 2020.

SECI is set to sign the power sale agreements (PSAs) for 3 GW of solar projects, according to the official. PSA for 500 MW has been signed with Grid Corporation of Odisha (GRIDCO) and approved by the Odisha Electricity Regulatory Commission. PSA for 300 MW is finalized with the distribution company (DISCOM) of Chhattisgarh. Tamil Nadu DISCOM is likely to buy 1 GW. SECI is also in discussion to sell the remaining 1,200 MW.

According to Mercom’s recently released Q2 2021 India Solar Market Update, the average cost of large-scale solar projects in the second quarter of 2021 (Q2 2021) was Rs38.6 million per MW. The cost increased by 12 per cent when compared to the same period last year when it was Rs34 million/MW and a 5 per cent rise from the previous quarter (Q4 2020) when the cost was about Rs35.3 million/MW.

In the long-term, the market is hoping for solar component costs to start declining again once the COVID-19 related supply chain issues are resolved. The manufacturing-linked tender also had a greenshoe option, where the companies could opt for an additional capacity to both develop and manufacture. Under the greenshoe option, Adani had offered an additional capacity of 1,500 MW solar cell and module manufacturing and 6 GW generation. Azure had taken the greenshoe option for an additional capacity of 500 MW manufacturing and 2 GW generation.

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