Solar Tariffs Drop to a new low of Rs 1.99/kWh in Latest Gujarat Auction

The latest round of auctions for 500 MW worth of solar projects in Gujarat has seen tariffs drop to a new low of Rs 1.99/kWh in India.

The latest round of auctions conducted by the Gujarat Urja Vikas Nigam Limited’s (GUVNL), for 500 MW worth of solar projects to be developed in the state, has set a new record for the lowest solar tariff in India. With L1 tariffs reaching Rs 1.99/kWh, the auction beat the recently set record Rs 2/kWh which was set last month.

According to industry sources, the L1 tariff was quoted by four bidders which together were awarded 500 MW capacity in the auctions. NTPC Ltd secured the maximum capacity under the tender yet again, with the state-owned power giant securing 200 MW project capacity at the L1 tariff. Further, Aditya Birla Renewables, Torrent Power and Saudi Arabia’s Aljomaih Energy and Water Company secured 120 MW, 100 MW and 80 MW capacity respectively under the tender at the L1 tariff. For NTPC, this new resurgence in bidding and low prices follows the  set up of its subsidiary, NTPC Renewables, where it gets the benefit of lower tax rates too. Besides all its other advantages as an incumbent giant with competitive access to funds. Another winner, Torrent Power is also not such a big surprise, considering the groups stake in the power distribution business in Gujarat.

GUVNL will now enter into power purchase agreements (PPAs) with the successful bidders for a period of 25 years from the scheduled commercial operation date (SCOD) of the project.

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At the end of September, GUVNL had issued the tender for the purchase of 500 MW of solar power through competitive bidding. With the solar power set to be procured from grid-connected solar photovoltaic power projects to be set up in the state.

According to the request for selection (RfS) document for the auction, the objective behind the tender was for the power utility to fulfil the renewable power purchase obligations (RPO) and meet future requirements of Discoms. “GUVNL intends to procure solar power up to 500 MW under Phase XI,” it stated.

Just under a month ago, the solar tariff record was broken in India when in the Solar Energy Corporation of India (SECI) auctions for its 1070 MW solar tender, two L1 bids were received for then the new lowest of Rs 2 per kWh. The record low L1 bid was submitted by the same firm i.e. Saudi Arabia’s Al Jomaih Energy and Water Co which has also bagged 80 MW capacity with the new lowest tariff in the Gujarat auctions, and also Sembcorp Energy India subsidiary Green Infra Wind Energy. They secured 200 MW and 400 MW capacity respectively. 

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The L1 bid was closely followed by NTPC ltd which submitted the bid of Rs 2.01/kWh for 600 MW capacity. However, the firm will be awarded only 470 MW capacity in the tender i.e. the remainder of the 1070 MW capacity after the capacity for the L1 bids is allocated.

In August, we had reported on (then) the latest round of solar auction results in the state of Gujarat. GUVNL’s 700 MW solar tender had seen the entire capacity awarded to five bidders. With Tata Power and Vena Energy submitting the winning bids (Lowest Bids – L1) of Rs 2.78/kWh.