Saturday, 16 July 2016

Rajasthan is most attractive solar project destination in India, proves NTPC auction

Rajasthan confirmed its position as the most attractive solar project destination in the country with the latest NTPC auction in the desert state, which saw the winning bids falling to Rs 4.35-4.36 per kwH.

Of the 130 MW on offer, 50 MW was won by Shapoorji Pallonji Infrastructure Capital and 60 MW by Mahindra Susten, both offering to sell electricity produced from their projects at an identical Rs 4.35 per kwH. The remaining 20 MW was won by Prayatna Developers of the Adani Group at Rs 4.36 per kwH.

In these reverse auctions, the developer that offers to sell electricity at the lowest price wins. The latest wining prices are just a shade over the lowest ever offered by a solar project developer in India — that, too, in Rajasthan. Fortum Finnsurya bid Rs 4.34 per kwH to win a 70 MW project at the last NTPC auction in Rajasthan in January.

In that auction, however, land for the project was ensured at the Bhadla Solar Park in Jodhpur district, which has the highest solar radiation in the country. In the current case, no land is being provided. Developers will have to locate and develop the land themselves — a condition which may have contributed to keeping the tariff marginally higher.

Solar tariffs fell steeply in 2015, but appeared to have bottomed out after the Bhadla Solar Park auction. In at least five auctions since then — in Maharashtra, Gujarat, Uttar Pradesh, Andhra Pradesh and Chhattisgarh — the winning tariff remained stuck at the reserve price of Rs 4.43 per kwH (barring one bid of Rs 4.41 per kwH in Maharashtra). In other auctions, the price was higher.

Fears were expressed that aggressive bidding had pushed solar tariffs too low and a correction was likely.

Expert's View:

It is obvious that Rajasthan has been one of the most attractive for solar project due to its high solar irradiance and barren lands. With such tariff of solar power, I can assume that within 5 years down the line solar power would become most cheapest power source in India. However there are some concerns regarding investmnet but it will be overcome with proper policies.

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