With different ceiling rates, 7,670 MW solar projects on offer across India

Uttar Pradesh, which will host 1,650 MW of solar projects, will have ceiling rate of Rs 3.43/unit

India would see close to 7,670 MW of solar power projects to be tendered in the next two months which will have a benchmark price. However, it will vary as per the location. This is the first time that differential ceiling rates have been set and do not have viability gap funding for the bidder to quote lower than the market rate.

For the 3,000MW project cluster (250MW*12), the maximum tariff payable is fixed at Rs 2.93/ unit for 25 years. Bidders will have to quote below these benchmark rates. These projects will be set up across the country. Location of the project and sale of power would be managed by the nodal agency for tendering solar projects – Solar Energy Corporation of India (SECI).

Another batch of 2,000MW of solar project tender (250*8) to be set up across the country and the Kadapa Solar Park (750 MW) in Andhra Pradesh and Pavgada Solar Park (200 MW) in Karnataka will also be offered at same benchmark rate. The tariff of Rs 2.97 per unit was discovered in the bidding of Rewa Solar Park (750MW), last year.

Uttar Pradesh, which will host 1,650 MW of solar projects, will have ceiling rate of Rs 3.43/unit. These are six solar parks of 275 MW each in several parts of the state. The same ceiling tariff is for 70MW solar power project in Assam.

Solar tariff has been falling constantly and touched a record low Rs 2.44 per unit during last year. It went up slightly in an auction held in Gujarat in the range of Rs 2.65-3.36/per unit. As tariffs fell faster than commissioning of older projects, states have been reluctant to purchase costlier renewable power, some have even gone on their purchase agreements. The government in order to stabilise the rates has been contemplating on having a benchmark rate, said officials.

Sector experts, however, pointed out that the benchmarking has come at a time when the players are unsure over the cost of solar. Indian solar panel makers have moved Directorate General of Safeguards to impose a duty on solar imports. The DGS has suggested a preliminary duty of 70 per cent. If confirmed, this could escalate the cost of solar, almost close to Rs 3 per unit.

“More than 80 per cent of the Indian solar industry is dependent on imports. Any duty will lead to price escalation. The recent notification of the government allowing pass through of such duties is a positive but that still will increase the cost for the developer,” said a Delhi based sector analyst.

Rating agency ICRA in its latest report also said the quantification of actual tariff changes will remain critical from the cash flow perspective of the affected developers. “Moreover, the retrospective applicability of such duty under change in law remains critical for projects which have been recently awarded in bidding route from the viability perspective of such projects,” it said.

Source: business-standard