India: SECI tender set to drive solar tariffs to record low of 6 US cents/kWh

Solar power in India is poised to become among the cheapest in the world following the opening of the Solar Corporation of India’s (SECI) latest tender.

The SECI has already invited online bids for its 750 MW tender in the state of Rajasthan at a reserve price of INR 4/kWh ($0.06), and the consensus appears to be that the winning bids will come in below that.

The lowest winning solar PV bid thus far in India was offered earlier this year by Finnish developer Fortum, which secured a rate of INR 4.34/kWh ($0.07) for its 70 MW solar plant in Bhadla. Since that bid, SECI has consistently lowered the reserve price of its tenders, falling to INR 4.35/kWh at the last issuance.

This latest tender (which is for a 500 MW Bhadla Phase III and a 250 MW Bhadla Phase IV solar park) will pitch solar PV in competition with conventional thermal power sources, and could well prove more attractive to Indian Discoms that have so far been reluctant to buy solar power from the grid.

"We want tariffs to go lower, so that states show more interest in solar energy," said SECI MD Ashvini Kumar. India’s distributed electricity companies have grown increasingly cost conscious in recent months, often flouting the country’s ‘must run’ rules for solar in favor of coal. In Rajasthan in particular, this has led to the curtailment of solar power, which is why many PV advocates operating in the state will welcome these lower prices.

Prior to Fortum’s record-low bid, bankrupt U.S. clean energy developer raised eyebrows a year ago with its winning bid of INR 4.63/kWh for an Indian solar project – a price that, at the time, was largely considered unattractive and unsustainable.

Even in India’s small rooftop solar sector prices have begun to tumble, with recent data from Bloomberg New Energy Finance (BNEF) finding that residential customers can now install PV at costs as low as $0.069/kWh.