SunEdison’s bid brings solar power tariff to record low

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solar-k8YG--621x414@LiveMintMumbai: US-based SunEdison Inc’s aggressive bid for the tender of 500 megawatts (MW) capacity offered under the Jawaharlal Nehru National Solar Mission (NSM) in Andhra Pradesh has seen India’s solar power tariff touch a record-low of Rs.4.63 per kWh (kilowatt-hour).

Day two of the auction, which began on Tuesday afternoon and ended well past midnight, saw the participation of a large number of domestic and multinational renewable energy firms, but closed with SunEdison’s lowest bid ofRs.4.63 per kWh for the entire 500MW.

“There are 15 or 20 companies that are in the same ballpark in their bids (as SunEdison). We are not particularly aggressive,” Pashupathy Gopalan, president, SunEdison Asia Pacific, said over the phone from Hong Kong.

Of the 28 companies that moved to the second round of this bidding process, nine, including Italy’s Enel Green Power SpA, Reliance Power Ltd, ReNew Solar Pvt. Ltd, Solar Arise, Acme Solar and Orange Renewable Power, ended their bids under Rs.5 per kWh. Other bidders included India’s JSW Energy Ltd and Welspun Renewables, China’s Trina Solar and US-based First Solar.

India’s push to boost wind and solar power production provides opportunities for global companies that have been hit by the plunge in international crude oil prices.

The country has raised its 2022 solar energy target to 100GW from 20GW as part of the Narendra Modi-led National Democratic Alliance (NDA) government’s efforts to lower dependence on coal-fuelled electricity.

SunEdison, the world’s largest renewable energy company, made its low bid late on Tuesday night beating Japan-based telecom and Internet firm SoftBank Group Corp.’s quote ofRs.4.80 per kWh for the 500MW, according to people aware of the e-auction, where company names were not disclosed.

SoftBank announced a joint venture with India’s Bharti Enterprises Ltd and Taiwan-based Foxconn Technology Group to form SBG Cleantech Ltd, a clean energy company, in June. It has so far committed to invest about $20 billion in various solar projects in India. “Delighted that an all time low solar tariff of Rs.4.63 has been achieved during reverse e-auction conducted by NTPC,” Piyush Goyal, minister for power, coal and renewable energy, tweeted on Wednesday morning.

India has a $250 billion investment opportunity in the renewable energy sector, Goyal had said at Mint’s fifth energy conclave in New Delhi in September.

SunEdison’s Gopalan praised Goyal and the ministry of new and renewable energy (MNRE) officials for having lowered the risk associated with solar power projects in India by eliminating land development risks.

“As a result, the risk in the project is significantly reduced,” he said, when asked about the viability concerns of projects won on aggressive bids.

Some industry experts raised concerns over the viability of such an aggressive tariff, arguing it could result in further aggressive bids in the auction in Rajasthan—to be held later this year for a capacity of 420MW—given the lower solar park charges in the state compared with Andhra Pradesh. NTPC had invited bids from interested parties to participate in July.

“We acknowledge that there is no doubt about these tariffs being very aggressive. The assumptions for cost of equipment, cost and other terms of finance, return expectations and presumed future benefits through securitization of assets and/or perceived premium in valuations in case of an exit are all being considered at levels that are more aggressive than what we would generally assume,” said Jasmeet Khurana, associate director, consulting, Bridge to India, a boutique consultancy and knowledge provider in the Indian cleantech market.

The bid from SunEdison came as a surprise, as the company, which is looking to consolidate its business globally and cut costs after a series of big acquisitions, is likely to back out of a deal to buy Singapore-based Continuum Wind Energy, which has assets in India, Mint reported on 22 October. On Monday—the first day of the e-auction—bids were submitted for over 5.5 gigawatt (GW) by 30 developers with tariffs ranging between Rs.5.21 per kWh and Rs.6.45 per kWh.

India’s strategy of a foreign currency-denominated tariff plan for solar energy is aimed at providing solar power at a new low of Rs.4.75 per unit to the states, Mint reported.

In the last financial year, the average rate of electricity sold by state-run NTPC Ltd’s coal-fuelled projects was Rs.3.25 per unit, while the tariff of power from its other projects ranged between Rs.2 and Rs.4.50 a unit.

The National Democratic Alliance government has pushed renewable energy to the top of its energy security agenda. The target of achieving solar capacity of 100,000MW by 2022 would require an investment of around Rs.6.5 trillion over five years. The government has also set a target of generating 60,000MW in wind power capacity by then. Of the total 100,000MW of solar power capacity planned by 2022, 20,000MW will come from solar parks and 40,000MW each from roof-top and distributed generation projects.

India launched the Jawaharlal Nehru National Solar Mission in 2010 with the aim of adding 20,000MW of grid-connected solar power to India’s energy mix by 2022 in three phases.

 

 

Source: Live mint

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