Solar energy prices set to fall below coal energy soon

India’s solar power prices may be set to fall below those of thermal (coal) energy.

This is based on an expected cost of around ₹2.90 per unit for the solar power projects at Bhadla in Rajasthan that have received 51 bids.

This price is less than the average rate of power generated by the coal-fuelled projects of India’s largest power generation utility, state-owned NTPC Ltd, at ₹3.20 per unit.

State-run Solar Energy Corporation of India (Seci), which is running the bid process for 750 megawatt (MW) of solar power capacity at two parks, has received bids totalling 8,750 MW. The bidders include some firsttime participants in India, such as Saudi Arabia’s Alfanar.

The solar space has seen a significant fall in tariffs from ₹10.95-12.76 per kilowatt-hour (kWh) in 2010-11. The previous low was ₹3.15 per kWh, bid by France’s Solairedirect SA in an auction last week to set up 250MW of capacity at Kadapa in Andhra Pradesh. It was preceded by ₹3.30 per unit for a 750MW project at Rewa in Madhya Pradesh.

Ashvini Kumar, MD, SECI credits the Rewa bid with being a tipping point. The structuring in terms of payment guarantee and offtake arrangement was the trigger for the drop in prices and sig- 20 16 12 8 4 0 2011 2012 2013 nalled the arrival of the low solar power tariff regime, he explained.

“Prices have been falling and then came RUMS (Rewa Ultra Mega Solar park)...and that kind of created history. There was aggressive bidding. A lot of credit was given to the structuring of the PPAs (power purchase agreements), bids and offtake arrangement, security by state and things like that,” said Kumar.

He added that a sub-₹3.00 per unit price is possible. “Prices haven’t bottomed out.”

In Bhadla, while Saurya Urja Company of Rajasthan Ltd is developing a 500 MW park, Adani Renewable Energy Park Rajasthan Ltd is developing another of 250 MW capacity. Rajasthan 2014 2015 2016 2017 Renewable Energy Corporation Ltd is a joint venture partner in both. While a total of 24 bids totaling 5,500 MW were received for the 500 MW capacity on offer, the 250 MW park saw 27 bidders totalling 3,250 MW. After the financial bids are opened within four weeks, a reverse auction process will be run to select the developers.The bidders include Aditya Birla Renewable, Hero Solar, SBG Cleantech One Ltd, ReNew Solar Power Pvt Ltd, ACME Solar Holdings Pvt Ltd, Green Infra and Azure Power.

Kumar also attributed the growing bidders’ interest to tripartite agreements between the RBI, the government and state governments.