Tariff bids: ACME Solar in wait-and-watch mode
Solar power developer ACME is adopting a ‘wait and watch’ approach in the midst of aggressive bids for solar power projects that have seen winning tariff bids as low as ₹4.63 a unit.
“In reverse bidding, things are very competitive the world over…. There is no way you can get to ₹4.63 a unit levels without cutting your IRR (internal rate of return) expectations. These bids are from those who want to enter the market, which we do not need to do. We already have a portfolio of 1,200 MW so we now have a ‘wait and watch’ approach,” Prashant Panda, President-Business Development at ACME Solar Holdings told BusinessLine. Panda said in the current cost structure, for projects to be delivered by end-2016, tariffs of below ₹5 a unit will be sustainable for ACME at a “fair IRR”.
“We might get adventurous once in a while, otherwise my personal belief is that we should wait and watch for a few more months,” he added.
In the past two months, the US-based SunEdison as well as Japan’s Softbank and Bharti Enterprises joint venture SBG Cleantech won one solar power project each by bidding at ₹4.63 a unit. For SBG Cleantech, this was the first project it had won.
ACME, which has received investment from French renewable energy major EDF Energies Nouvelles and natural resources saving group EREN, Luxemburg, will get close to ₹6 a unit on an average across its portfolio of 1,200 MW.
By the end of the fiscal, the company would have commissioned around 400 MW out of its 1,200 MW portfolio, said Panda.
According to him, the solar power tariffs have hit the lower threshold for projects to be delivered by end-2016.
“I think we have reached a threshold for now. But 2017 deliveries could see another drop. By that time, we might see another drop in module prices. Module prices do govern tariffs. I am speculating but we can see a drop for 2017 deliverables of solar power projects,” he said.