NTPC 1.2 GW ISTS solar tender saw aggressive tariff of INR 2.43/ kWh
Today, NTPC conducted the reverse auction of its 1.2 GW ISTS solar tender. Last month, the tender received a good response with bids of about 1.7 GW of capacity. The tender auction was conducted today and it saw winning tariff of INR 2.43/kWh. The minimum CUF condition for this tender is 19% and the commissioning timeline is 24 months.
Auction winners are O2 power (400 MW), Azure Power (300 MW), Tata Power (370 MW) and AMP Energy (100 MW). With this win, O2 Power, which is a new entrant in the market will have a pipeline of 780 MW of solar projects. AMP Energy is also now aggressive in the recent tenders and is looking to build its portfolio and with this 100 MW win it will now have a portfolio of 300 MW of solar projects in pipeline.
Azure has also won a substantial capacity after a long gap of last win in SECI’s manufacturing tender in December 2019, under which it has received Letter of Award to build 4 GW of solar projects (1 GW by 2022 and rest by 2025).
The tariffs seen in the last two auctions i.e. earlier SECI 2 GW with INR 2.36/ kWh tariff and this one are highly aggressive. The low tariff trends can be the desperate situation wherein developers are looking to take advantage of the current situation wherein only safeguard duty of 14.9% is applicable. Though there is highly likely chance of double duties in form of safeguard duty as well as Basic Custom Duty (BCD) of 20-25% due to ongoing China border issues.
There are two possible reasons for such low tariffs:
- Auctions completed before a formal notification of BCD applicability will get a passthrough under “Change In law” provision.
- The module prices are also likely to fall further with the increasing gap in demand supply situation in next few months due to slowdown triggered by COVID 19 pandemic. According to JMK Research price tracker, from Jan 2020- July 2020 period, prices of multi-crystalline modules have already fallen by more than 15% in India market.
Figure 1: NTPC, 1.2 GW, Solar, ISTS tender result details
Source: JMK Research