Solar tariff rises to ~2.65 a unit in Gujarat bids

Tender invited by Gujarat Urja Vikas Nigam for 500 megawatt (Mw) of solar power projects have received bids in the range of ~2.65-3.36 a unit — a minor correction from the last lowest bid of ~2.44 a unit discovered in Rajasthan.

Sector experts attributed the rise in tariffs to the impact of the goods and services tax (GST) regime and the increase in cost of solar panels coming in from China.

Chennai-based GRT Jewellers quoted the lowest tariff of ~2.65 a unit for 90 Mw of project capacity, followed by Gujarat State Electricity Corporation and Gujarat Industries Power which quoted ~2.66 and ~2.67 a unit, respectively, for 75 Mw each. NYSE-listed Azure Power won the tender for 350 Mw by quoting ~2.67 a unit.

Other bidders included ReNew Power, Tata Power Renewable Energy, UKbased Lightsource Renewable Energy India Assets, Fortum Power, and Torrent Power.

“The 5 per cent GST on solar effectively increases the cost by 10-20 paise. At the same time, the price of panels in China is seeing an upswing now. It is close to 34 cents a unit, compared with 28-30 cents about six months ago, when super low tariffs were discovered in India,” said a Delhi-based sector expert.

The free fall in solar tariffs in India has been attributed mostly to the low cost of Chinese panels flooding the market. As the demand of panels in China bounces back, prices are slated to rise.

Close to 75 per cent of Indian solar installed capacity sources panels from China. Solar tariffs in India have fallen 80 per cent in six years. In the past one year only, the tariffs went from sub-~5 to below ~3 a unit. Even the rate discovered in Gujarat is lower than coal-based power and spot power market rates.