Auction Winners Bid at Rs 2.29/unit For 500 MW GUVNL solar auction

In bids that continue to surprise, the Gujarat Urja Vikas Nigam Limited's (GUVNL) January tender for 500 MW of solar power has attracted a very aggressive set of bids from the 4 winners declared. Fortum (through Alpha Energy- 200 MW), SJVN (100 MW), Hinduja Renewable Energy (120 MW) and UPC Renewables (80 MW) have bid, and won the 500 MW capacity on offer.

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With every indicator and report confirming an increase in the cost of large solar projects, these bids can be considered a significant surprise, although GUVNL will hardly be complaining. The state distributor has been aggressive in its tenders in the past few months, with tenders across the spectrum, including under PMKUSUM being floated in the recent past.

All these bids have also taken into consideration the impact of BCD (Basic customs duties), that are set to kick in from April 1, 2022, at 40% on modules and 20% on solar cells.

With a CUF requirement of just 17%, domestic procurement of quality modules should be relatively easier, which might be one reason these bidders have felt confident enough to bid at these rates.

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In fact, in GUVNL's 700 MW tender of 2020, the bid winners had come in at Rs 2.78/unit. Thus, for the state entity to get bids that are almost 15% lower, 18 months down the line, is creditable.

For the Gujarat discom, it's a far cray from the situation before 2020, when it used to struggle to attract quality bids. A major focus on renewables, payments on time, and a clear and transparent approval process has helped change the picture completely today.

The GUVNL bid will also put pressure on other state entities to try and get bids closer to these numbers. We will that it is safe to say that no other state is likely to go under these numbers in the near future.