Another day, another auction, Indian developers on a winning spree

Auction results for the NTPC (350 MW) tender in Telangana were announced last week. The capacity was fragmented into 35 projects of 10 MW each and a bidder could apply for a maximum of 10 projects. The tender was not attached to a solar park and hence, land acquisition and transmission would be in the developer’s scope. NTPC has now allocated 2,520 MW out of the total 3,000 MW target under state specific bundling scheme (NSM Phase II, Batch II)

  • Renew Power (100 MW), Karvy Consultants (50 MW), Azure Power (100 MW), Adani (50 MW) and Acme (50 MW) have won projects with tariffs ranging from 4.66/kWh to 4.67/kWh
  • The tender was oversubscribed by more than 2x, developers such as Mahindra, Acme, Solar Pack, Suzlon are a few among other companies that participated but did not win any projects
  • International developers refrained from participation in this tender largely due to unavailability of solar park infrastructure

We believe that these prices are relatively attractive in comparison to the NTPC allocations in neighboring state Andhra Pradesh because it is expected that developers will be able to arrange land and transmission at almost half the cost of solar park infrastructure and there has also been a 2-3% reduction in module prices in the last 6 months. NTPC has been successful at maintaining a competitive environment in its auctions and it is likely that they will receive tariff bids in the similar range (INR 4.65/kWh-INR 4.75/kWh) in the forthcoming Andhra Pradesh 250 MW (Solar Park) auction as it comes close to allocating the 3,000 MW for project development.

A total capacity of 527 MW has been commissioned in Telangana and around 2,500 MW is in the pipeline, which is due to be commissioned in 2017. Power demand Telangana is expected to be around 6,000 MW by the year 2017, which means that the state would meet approximately 50% of its power demand from solar at peak generation. Due to high penetration of solar in the southern states of Telangana, Andhra Pradesh and Karnataka, grid stability in that region is likely to become an increasingly critical issue.

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