Tariffs in the Uttar Pradesh New and Renewable Energy Development Agency’s (Upneda) latest auction on Wednesday fell significantly from the last one held in July, but later cancelled without assigning any reasons.
The earlier auction of 1,000 MW had seen the lowest tariffs at Rs 3.48 to Rs 3.55 per unit. The auction was arbitrarily cancelled after a fortnight with many in the industry speculating that it was because the state government felt the price reached was too high.
The lowest tariffs reached at Wednesday’s auction of 500 MW were between Rs 3.17 and Rs 3.23 per unit, seeming to justify the state government’s decision.
Developers were allowed to bid different tariffs for projects at different locations. Thus, the biggest winner was NTPC, which won 160 MW in all —140 MW at Rs 3.17 per unit and 20 MW at Rs 3.21 per unit. The Adani-owned Mahoba Solar got 50 MW at Rs 3.19 per unit and another 50 MW at Rs 3.22 per unit. The other winners were Sukhbir Agro Energy, Talettutayi Solar Projects, Eden Renewable and Giriraj Renewables, each of which got 50 MW, while Maheshwari Mining and Energy got the remaining 40 MW.
In other recent solar auctions conducted by Solar Energy Corporation of India (SECI) and the Gujarat government, tariffs have been as low as Rs 2.44 per unit. The relatively higher tariffs reached in UP are attributed to its weaker solar radiation and poor financial ratings of its discoms, which raised the cost of borrowing for UP-based projects.
The imposition of safeguard duty on solar panels imported from China and Malaysia from September this year has also contributed to the rise in tariffs. The Directorate General of Trade Remedies (DGTR) has imposed safeguard duty of 25% for a year, followed by 20% for the next six months and 15% for another six.