Loading...

It is raining solar auctions in India, but high competition persists


21 December 2015 | BRIDGE TO INDIA

It is raining solar auctions in India, but high competition persists

Last week, three e-auctions of solar projects were completed by National Thermal Power Corporation (NTPC). Our summary observations are as below:

  • Competition continues to be intense with Softbank-Bharti group JV winning 350 MW in Andhra Pradesh at a price of INR 4.63/kWh. Interestingly, despite winning the previous allocation of 500 MW at INR 4.63/kWh, SunEdison didn’t qualify for the second round in this project.
  • BRIDGE TO INDIA expects tariffs to go down further for upcoming auctions in Rajasthan (420 MW) and Karnataka (600 MW) with some possible upward adjustment in the market thereafter.
  • Projects with domestic module stipulation see price premium of 11%.

The three auctions completed last week were for the following projects:

  • A 350 MW solar project in government solar park at Gani-Sakunala, Andhra Pradesh was won by a Softbank-Bharti group JV on PPA basis at a price of INR 4.63/kWh;
  • 3 x 50 MW projects in government solar park at Gani-Sakunala, Andhra Pradesh were won by Azure Power (100 MW) at INR 5.12/kWh and Adani Group (50 MW) at INR 5.13/kWh respectively on PPA basis – these projects had the stipulation of using domestically manufactured cells and modules;
  • 4 x 65 MW projects were won by Vikram Solar (130 MW at INR 56.28 million/MW), Jakson (65 MW at INR 56.34 million/MW) and Tata Power (65 MW at INR 56.40 million/MW) on EPC basis in Bhadla solar park, Rajasthan again using domestically manufactured cells and modules – these projects will be developed and financed by NTPC.

After announcing the 100 GW target, Indian government is walking the talk. Auction process has already been completed for over 10 GW of solar projects and a further 6.5 GW of solar projects are expected to be allocated in the next three months. This frenetic pace of activity is a big step-up in contrast to historic solar capacity addition of approximately 1 GW per annum over last three years.

Despite the huge pipeline, the auctions continue to see intense competition with tariffs coming down sharply. Several developers including Indiabulls, FRV, ReNew, Reliance, Azure Power, Orange Renewables and Acme have shown appetite to win projects at tariffs of less than INR 5/kWh.

While several market participants have expressed concerns at such low tariffs, BRIDGE TO INDIA believes that competition has been particularly intense for these projects as they offered the best risk profile for international developers in India – no land acquisition or transmission connectivity risk combined with possibly the best India off-take risk in the form of NTPC. It is also worth noting that: i) these projects were the first to be auctioned under National Solar Mission after a gap of about two years; and ii) projects have been auctioned in such large sizes for the first time in India providing developers with significant scope to optimize operating costs. Earlier auctions typically had a cap of 50 or 100 MW per developer. Both these factors added further to the intense competition.

BRIDGE TO INDIA expects strong competition to persist for solar park based bidding in Rajasthan (420 MW) and Karnataka (500 MW open and 100 MW DCR) organized by NTPC. These auctions are due in next two months. Indeed, tariffs could go down even below INR 4.63/kWh as solar park charges for these states are lower than that in Andhra Pradesh. Going beyond that, we expect competition to ease slightly for projects tendered by Solar Energy Corporation of India (SECI).


Recent reports

India Solar Map | December 2023

India Solar Map | December 2023

India Solar Map 2023 is an info-graphic report covering growth of utility scale solar sector – national and state-wise commissioned and pipeline capacity, leading market players and portfolio details of top 16 project developers. Capacity addition in 2023 fell 51% YOY to 5,924 MW taking total utility scale solar capacity to 59,840 MW. Total project pipeline stands at a record 74,161 MW.

India Corporate Renewable Brief | Q4 2023

India Corporate Renewable Brief | Q4 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

India PV Module Intelligence Brief | Q4 2023

India PV Module Intelligence Brief | Q4 2023

This report captures quarterly trends in module demand and supply, import and domestic production volumes, supplier market shares, break-up by technology and rating, global market scenario, pricing trends across the value chain, key policy developments and market outlook.

India Solar Compass | Q4 2023

India Solar Compass | Q4 2023

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and policy announcements, equipment prices, financial deals and other market developments. It also provides market outlook for the next two quarters.

Inter-state OA — opportunities and challenges

Inter-state OA — opportunities and challenges

Inter-state transmission system (ISTS) open access (OA) renewable market is growing strongly on the back of multiple drivers including a waiver from ISTS charges together with decarbonisation pressure on corporates and streamlined transmission connectivity approval process. However, the ISTS route savings are viable only for projects commissioned by June 2026 (at least 75% ISTS charge waiver).

India Corporate Renewable Brief | Q3 2023

India Corporate Renewable Brief | Q3 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

To top