Solar tariffs have dropped to an all-time low of ₹4.63 a kWhr. That was the price quoted by the winning bidder, SunEdison, in an e-auction by state-owned utility NTPC for 500 MW of solar power.
SunEdison, a US renewable energy major, has won the entire 500 MW. The company will put up the plant in an NTPC-developed solar park in Andhra Pradesh’s Kurnool district.
To put the tariff in perspective, last year four thermal power companies contracted to sell power to the Tamil Nadu Generation and Distribution Corporation for 15 years at ₹4.91 per kWhr
It is learnt that another bidder, Indiabulls, also quoted ₹4.63, but SunEdison got through because its bid was submitted earlier. The bidding went late into Tuesday night. On Wednesday morning, Power Minister Piyush Goyal tweeted: “Delighted that an all time low solar tariff of ₹4.63 has been achieved during reverse e-auction conducted by NTPC.”
Pashupathy Gopalan, who heads SunEdison’s Asia-Pacific operations, told BusinessLine that such a low bid was possible primarily because NTPC, a profit-making PSU, was the buyer.
Since the solar plant will come up in a fully-developed park with transmission lines, the risks are mitigated further.
Some in the industry were sceptical about the economics of SunEdison’s tariff. A few felt that with NTPC as the buyer, the lower counter-party risk could at best bring down costs by 1.5 percentage points.
Sunil Jain, CEO & Executive Director, Hero Future Energies, said that a tariff of ₹4.63 could work if the project was funded by un-hedged foreign currency loans.