Tepid response to auction for solar projects in Gujarat

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Winning bids for solar projects in Gujarat remained stuck at Rs 4.43 per unit, the reserve price set for most of the recent auctions in India, suggesting that prices may have bottomed out. The contracts were awarded on the basis of the least subsidy sought.  The auction conducted by the Solar Energy Corporation of India for 160 MW of projects at the Charanka Solar Park in Gujarat (four projects of 40 MW each), was won by state-owned Gujarat Industries Power Co, which got 80 MW, Mahindra Renewables, which got 40 MW, and Orange Renewables.  With all bids quoting the same tariff, the winners were decided on the basis of the least subsidy — or viability gap funding. The Ministry of New and Renewable Energy provides VGF up to Rs 1 crore per MW to solar developers.  Gujarat Industries sought VGF of Rs 67.99 lakh per MW for one project and Rs 69.75 lakh per MW for the other. Orange Renewables sought Rs 70.25 lakh per MW and Mahindra Rs 77.77 lakh per MW, a top official of SECI said. In four solar auctions held by SECI this year in Maharashtra, Uttar Pradesh, Andhra Pradesh and Chhattisgarh, the tariffs quoted did not drop below below the reserve price of Rs 4.43 per unit.  The only exception was Bhageria Industries in Maharashtra, which won 30 MW with a bid of Rs 4.41per unit, without seeking VGF.  At an NTPCBSE 2.36 % auction in the Bhadla Solar Park in Rajasthan in January, the winning bids fell to Rs 4.34-4.36 per unit.  No other offers this year have gone below Rs 4.43 per kwH, probably indicating that that solar tariffs, after a steep fall in 2015, have temporarily bottomed out. Bhadla was a special case because it enjoys the highest solar radiation in the country. In the context of Gujarat, however, the tariff has fallen steeply from the last SECI auction in that state in 2014, when the winning bid was Rs 5.50 per kwH.  Gujarat was a pioneer in solar energy in India and for many years had the largest installed capacity to generate power from the sun among Indian states.  The Charanka Solar Park, built by the state government, was the first of its kind in the country and the model was adopted by SECI across the country. However, this is the first auction in the state in two years. Between May 2015 and 2016, Gujarat added only 115.31 MW of installed solar capacity, one of the lowest among states.

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