India solar tenders stalling after Rewa’s low tariffs

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
States have taken note and have stalled tendering while they try to renegotiate PPAs that are higher than those seen at Rewa. Credit: Seci

India needs to pick up the pace of its solar tendering to stay in touch with its ambitious targets, but recent low bids have caused widespread reworking of state tenders, according to consultancy firm Mercom Capital Group.

Tenders were flying thick and fast during the second half of 2015 and for most of 2016, but the speed slowed in late 2016. Meanwhile, Q1 2017 has seen a significant tail off in activity, with more than half of tendering (1GW out of 1.85GW) made up of retenders coming about through a lack of interest in some of the original offerings.

Despite the fanfare around the lowest ever India solar prices at Rewa of INR3.30/kWh (US$0.067), Mercom singled this out as one of the highest contributing factors to the recent slowdown. Other government agencies and states have taken note and have stalled tendering while they try to renegotiate PPAs that are higher than those seen at Rewa. Meanwhile, developers feel increasing pressure to meet similar low levels despite the highly unique parameters of the Rewa tender that led to the price declines.

However, a Ministry of New and Renewable Energy (MNRE) official told Mercom that the delays may simply be states reworking their tenders to imitate that of Rewa, bringing in similar guarantees and incentives before the pace picks up again in a manner that could see continued low prices.

Nevertheless, Mercom claimed that developers have found the slowdown “disconcerting”, while manufacturers are stumped by having made plans in line with far greater activity. The states of Bihar, Jharkhand, Tamil Nadu, Rajasthan, and Maharashtra were highlighted as having the biggest declines in tendering activity.

Delays in transmission infrastructure have already been cited as holding back tenders, but poor health of the distribution companies (Discoms) and weak power demand have also played a part. This weakening demand has been accentuated by increased captive consumption in the C&I sector, said Mercom.

The World Trade Organisation (WTO) ruling against India’s Domestic Content Requirement (DCR) has also caused multiple DCR tender delays and even cancellations.

Following the Rewa auction, Raj Prabhu, Mercom CEO, said: “Although this is the lowest tariff ever recorded in India, this auction has several special attributes which makes it hard to directly compare with previous low bids. […] The fear is that media, government officials and analysts will hype up the low bids and other states will then start pressuring developers to match bids from the REWA auction tariffs, which has happened in the past.”

Read Next

July 30, 2021
First Solar has unveiled plans to construct a 3.3GWdc module assembly facility in India, bolstering its manufacturing footprint outside of the US.
July 20, 2021
It is “unhealthy” for China to dominate solar manufacturing and production bases outside of the country are necessary to reduce the risk of supply chain disruptions, an Indian government official has said.
July 20, 2021
Vikram Solar has completed a new 1.3GW solar module manufacturing facility in Tamil Nadu, India, taking its total manufacturing output to 2.5GW.
July 13, 2021
Solar PV capacity in Asia Pacific could triple to 1,500GW by 2030, with China driving deployment and Indonesia set to be the region’s fastest-growing market, according to Wood Mackenzie.
July 9, 2021
Corporate funding in the global solar sector in the first half of 2021 was up almost threefold year-on-year, according to a new report from Mercom Capital Group.
June 28, 2021
Module and cell manufacturers in India will expand their production capabilities by 13.75GW for modules and 6.9GW for solar cells, according to research by JMK Research and Analytics

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
August 19, 2021
At 9am (PT) | 6pm (CEST)
Solar Media Events
August 25, 2021
Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
BRISTOL, UK