India’s SECI cancels 950 MW of solar tenders, seeks re-tender at lower rate

One of India’s leading lights for solar deployment suffered a setback last week as it was forced to drop 950 MW of planned solar tenders due to tumbling prices.

The Solar Energy Corporation of India (SECI) has cancelled proposed tenders in the states of Andhra Pradesh and Karnataka after a sharp drop in the price of solar in India to just INR 2.44/kWh – at the Bhadla Solar Park in Rajasthan – turned the heads of would-be bidders.

Following a series of delays, tenders for 950 MW of capacity – which was also to include storage support of 5 MW/2.5 MWh for every 50 MW of PV installed – were eventually announced between June and August last year. This capacity comprised 650 MW for Andhra Pradesh’s Kadapa Solar Park Tranche-IV and 100 MW for Tranche-V, and an additional 200 MW at Karnataka’s Pavagada Solar Park Tranche-VI.

However, the benchmark tariff set for these tenders was INR 4.43/kWh ($0.069/kWh) – a price that now appears quite uncompetitive given the recent cost reduction of solar projects across India. Mercom Capital reports that “steeply declining solar tariffs” may well have prompted the cancellation of the entire tendered capacity of 950 MW, but a SECI official has confirmed that there are plans afoot to renegotiate the capacity with state leaders based on new, lower tariffs more in line with current pricing.

“The lowest solar tariff has fallen to INR 2.44/kWh, so even with VGF [Viability Gap Funding], a project that includes storage can never hope to match it,” SECI managing director Ashwini Kumar told the Economic Times. “Everybody in the industry is disappointed because it was the first time we were trying this.”

The scrapped tenders’ storage plans were encouraging, and would have drastically boosted India’s installed storage base. India’s Ministry of New and Renewable Energy felt that its VGF support scheme would have helped offset the increased cost of storage, enabling developers to match these record-low tariffs that lacked both storage and VGF.