The tariff for solar projects developed under the domestic content requirement (DCR) category has declined by 35 per cent during the past year as the trend of aggressive bidding continues, according to Mercom Capital.
Earlier this month, the 250 MW DCR auction conducted by NTPC saw Azure Power quote a tariff of Rs.3.14 to develop a 250 MW solar project under the DCR category.
Other bidders to quote below Rs. 4 kWh in the same auction were ReNew Power and Waaree Energies, with ReNew Power quoting a tariff of Rs. 3.15 per /kWh to develop 150 MW and Waaree Energies quotingRs. 3.95/kWh to develop 25 MW.
Also participating were Mahoba Solar (UP), a subsidiary of Adani, which quoted a tariff of Rs. 4.44 /kWh to develop 250 MW, and Canadian Solar Energy Holding, which quoted Rs. 4.95/kWh to develop 100 MW.
Azure Power’s winning tariff of Rs. 3.14/kWh was Rs. 1.7 /kWh (35 per cent) lower than the previous low DCR tariff of Rs. 4.84/kWh quoted by Tata Power in NTPC’s Phase-II Batch-II auction. Power purchase agreements for that auction were signed in December 2016. This month’s NTPC auction represented the first successful DCR auction of 2017 and all participating bidders quoted tariffs below the Rs. 5/kWh mark.
In the auction, tariffs quoted ranged from a high of Rs. 4.95/kWh to a low of Rs. 3.14/kWh. There was also a notable difference in bids quoted, with the highest bid coming in almost 58 per cent above than the winning low bid.
“With a lack of activity, even DCR auctions are getting extremely competitive. Developers are desperate for growth and are willing to go as low as it takes to win projects,” said Raj Prabhu, chief executive officer of Mercom Capital Group. “It is also concerning that there is a 58 per cent difference of opinion as to what a viable tariff is,” he added.
Over the last year, non-DCR tariffs fell by approximately 44 per cent. During the same period Chinese module prices fell by approximately 23 per cent, while the price of Indian modules declined by about 17 per cent.
NTPC initially tendered its project in August 2017 and will allow the developer to build the project anywhere in India.
This is the first time that a global module supplier has participated in a DCR auction.