Solar tariffs set to reach a record low with reserve price at Rs 4/kwH
Solar tariffs are set to reach a record low with the Solar Corporation of India’s latest tender, which sets the reserve price at Rs 4 per kwH.
SECI has invited online bids for setting up projects with capacity of 750 MW at the Bhadla Solar Park in Rajasthan’s Jodhpur district — 500 MW in Bhadla Phase III and 250 MW in Bhadla Phase IV — as part of the second phase of the Jawaharlal Nehru National Solar Mission.
Bhadla has the highest solar radiation in the country and the country and thereby can generate power at the cheapest cost.
So far, the lowest bid had been Rs 4.34 per kwH, offered by Finnish major Fortum Finnsurya to set up a 70 MW plant at Bhadla in an NTPC-conducted auction in January this year.
In a number of subsequent auctions, SECI had set the reserve price at Rs 4.35 per kwH. The latest reserve price thus indicates a steep reduction. “We want tariffs to go lower, so that states show more interest in solar energy,” said SECI Managing Director Ashvini Kumar.
State discoms have often shown reluctance in buying solar and other forms of renewable power, since power from conventional thermal sources is cheaper. But a rate of Rs 4 per kwH competes very well with that of new coal.
It remains to be seen, however, how solar developers, who have already been complaining about falling solar tariffs affecting their margins, respond to the new reserve price.
As in earlier auctions, the government will provide viability gap funding as well, but projects will go to those seeking the lowest VGF .