Solar tariffs have crashed to record levels of less than ₹3 a kWhr in the auctions for 750 MW of solar projects in Rewa, Madhya Pradesh.
Mahindra Renewables, ACME Solar Holdings, and Solenergi Power (which belongs to the PE firm, Actis), have won mandates to set up 250 MW each and sell power at 297.9 paise, 297 paise and 297.4 paise per kWhr, respectively (4.5 US cents).
Since there is an escalation of 5 paise per kWhr per year for the first 15 years of the 25-year power-purchase period, the levelised tariff works out to ₹3.3 (4.9 US cents) a kWhr.
Around 20 solar power developers submitted an initial bid last month for three blocks of 250 MW each and the lowest quote — ₹3.64 — became the benchmark for further bidding, which began on Thursday and ended only on Friday evening. The power will be bought by Rewa Ultra Mega Solar, an equal joint venture of Madhya Pradesh Urja Vikas Ltd and the government of India-owned Solar Energy Corporation of India (SECI).
These “ridiculously low tariffs” have shocked many. “The government is the winner,” noted Sunil Jain, CEO and Executive Director of Hero Future Energies, which dropped out of the race earlier.
Industry experts said the players were assuming solar modules would be available at around 25 US cents, and betting on unhedged foreign currency loans at cheap interest rates, and constructing the plants themselves.