India: 750 MW of solar tendered at record low price

A new record-low price for solar in India has been set in the latest tender offered by the Solar Energy Corporation of India (SECI).

The new record-breaking price has been set for the Bhadla Solar Park in Rajasthan, and will see 750 MW of new PV capacity added for just INR 3.93/kWh ($0.0590/kWh), which undercuts the previous benchmark price for the state of INR 4.43/kWh ($0.0665/kWh).

Developers will build 500 MW for the Bhadla Phase-III Solar Park and 250 MW at the Bhadla Phase-IV Solar Park as part of the National Solar Mission’s Phase II, Batch IV. The tariff set also allows developers to bid for additional viability gap funding (VGF), and the auction winners will be based on the lowest bid price once VGF has been taken into account.

Additional incentives are also available, such as accelerated depreciation (AD) and concessional customs and excise duties. However, VGF and AD cannot be claimed simultaneously, reports Mercom Capital Group.

"Rajasthan is a trendsetter in India’s solar sector," said an official at the Ministry of New and Renewable Energy (MNRE). "Previously, the lowest tariff was INR 4.34/kWh ($0.0651/kWh)." The spokesperson added that the MNRE expects further reductions in this benchmark price, but those bidders that can achieve the lowest VGF amount in addition to the INR 3.93/kWh rate may well drag those costs even lower.

According to Mercom’s SECI source, the new tariff will be welcome news for India’s distribution companies (DISCOMs) operating in Rajasthan because it will propel solar to the front of the queue in terms of cost, and enable the DISCOMs to abide by the national ‘must run’ law for solar. “The state [of Rajasthan] has previously witnessed curtailment of solar and the new low tariff will give a boost to both the developers and DISCOMs.”

Mercom Capital’s India Solar Project Tracker calculates that the VGF program is responsible for 4,525 MW of SECI tenders, of which PPAs for 2,528 MW have been signed. Under the National Solar Mission, some 5 GW of GVF project tariffs have been revised, and there are reports that further tariff revisions are underway at the MNRE – Rajasthan’s tariff of INR 4.50/kWh will be revised down to INR 4/kWh according to Mercom, with SECI taking a trading margin of INR 0.07/kWh.