Solar energy prices in India likely to fall below coal energy
NEWDELHI: India’s solar power prices may be set to fall below that of thermal (coal) energy.This is based on an expected cost of ₹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, Rs3.20 per unit.
State run Solar Energy Corporation of India (SECI), which is running the bid process for 750 mega watt (MW) solar power capacity at the two parks has received bids totalling 8750 MW. The bidders include some first time participants in India, such as Saudi Arabia’s Al Fanar.
The solar space has already seen a significant decline in tariff from Rs10.95-12.76 per kwh in 2010-11. The previous low was Rs3.15 per kilowatt hour (kWh) bid by France’s Solairedirect SA in an auction last week to set up 250MW of capacity at Kadapa in Andhra Pradesh. This low was preceded by Rs3.30 per unit quoted for a 750MW project at Rewa in Madhya Pradesh.
Ashvini Kumar, managing director, 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 sharp drop in prices and signalled 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-Rs 3.00 per unit price is possible. “Prices haven’t bottomed out.”
In Bhadla, while Saurya Urja Company of Rajasthan Ltd is developing the 500 MW park, Adani Renewable Energy Park Rajasthan Ltd is developing another 250 MW capacity. Rajasthan Renewable Energy Corporation Ltd is a joint venture partne in both.
While a total of 24 bids totaling 5500 MW were received for the 500 MW capacity on offer, the 250 MW park saw 27 bidders totalling 3250 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 due to tri-partite agreement (TPAs) between the Reserve Bank of India, the Union government and the state governments, which provided comfort to power producers against payment defaults by state electricity boards (SEBs)
“Twenty three states have already signed the TPAs. So that comfort also is there,” said Kumar, adding that the remaining states will ink the TPAs by April end.
India’s growing green economy has been fuelled by the NDA government’s ambition around clean energy. India plans to generate 175 gigawatts (GW) of renewable energy capacity by 2022. Of this, 100GW is to come from solar power projects.
Analysts see good times ahead for the sector.
“The sector is also likely to benefit from the government’s thrust on the development of the second phase of 20GW solar energy and evolving payment security mechanisms,” credit ratings agency India Ratings wrote in a report on Thursday.
“We are upbeat. The trend which is there in the market should continue,” Kumar said.
An Adani Group spokesperson declined comment.
Prices have been falling and then came RUMS (Rewa Ultra Mega Solar park)... and that kind of created history. There was aggressive bidding ASHVINI KUMAR, MD, SECI