India: 6.5 GW of solar to be auctioned in next 3 months

The solar industry saw a boom this year after Mr. Narendra Modi took charge of the PM office. The Modi government set the bar at 150GW of renewable energy by year 2020, in which 100GW capacity would be generated through solar power.

Recently, there was a meet of the world countries in Paris, France, where India proposed an International Solar Alliance of 122 countries. After the formation of the International Solar Alliance on the first day of CoP21, solar companies saw a rise in their stocks all over the world. In India, a total of 6.5 GW of solar projects are expected to be up for auction in the next three months.

In addition to intense competition, it forecasts a sharp reduction in tariffs, particularly for the upcoming auctions in Rajasthan and Karnataka.

Following the unveiling of its ambitious 100 GW 2020 solar plans, the Indian Government is “walking the talk”. Overall, auction processes for more than 10 GW of solar have already been completed, with another 6.5 GW set to go up for auction in the next three months.

The 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 pipeline, prices are continuing to come down “sharply” with developers, including ReNew, Reliance and Azure Power, considering tariffs below INR 5/kWh.

Although criticism has been aimed at such low tariffs in the past but they are not a problem due to lower solar park charges in these states, and a relatively positive risk profile for international developers as there is no land acquisition or transmission connectivity risk combined with possibly the best India gives off-take risk in the form of NTPC.

In the next two months, the National Thermal Power Corporation (NTPC) is set to hold two auctions in Rajasthan and Karnataka, totaling 420 MW and 600 MW, respectively. There is expected to be “strong” competition, with tariffs potentially under INR 4.63/kWh.

In August, Madhya Pradesh began selling PV power at India’s lowest rate – INR 5.051/kWh, besting the previous lowest price set in Telangana by SkyPower, which secured a winning bid of INR 5.17/kWh.

Last week, the NTPC completed three solar auctions in Andhra Pradesh and Rajasthan. The table below provides more detail:

NTPC solar auctions

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