India saw historic low solar tariff of INR 2.36/ kWh
Today, Solar Energy Corporation of India (SECI) conducted its first reverse auction of a 2 GW solar tender under ISTS (Tranche IX) after a gap of four months due to the COVID-19 lockdown. Earlier last week, the tender received an overwhelming response from the developers with bids for more than 4.3 GW of capacity. The reverse auction of this was conducted today and it saw a historic low winning solar tariff of INR 2.36/ kWh from SolarPack, a Spanish Developer.
The key trigger for this kind of low tariff is zero safeguard duty for developers and pass-through from Basic Custom duty (BCD) under “Change In-law” provision in this specific period. This is likely to significantly reduce project costs.
Figure 1: SECI, 2 GW, Solar, ISTS (Tranche IX) tender result details
Source: JMK Research
Surprisingly, three of the winners- Solarpack, ENEL, and IB Vogt have no pipeline of solar projects and might be aggressive to build their portfolio. AMP Solar also has a project pipeline of only 100 MW plus a few other small projects under the Open access Corporate PPA route. EDEN, ReNew, and Ayana are the only ones with significant solar project portfolio.
Another interesting fact is that most of these winners are also international developers. Hence, access to low-cost financing can also be the key reason for such aggressive solar tariffs. Clearly, there is no dearth of investment opportunities in the Indian solar market. And it will be very interesting to see the tender activity for the next 18 GW of RE projects where bid submission is expected before July 31, 2020.