Indian 1.2GW solar auction sees ‘aggressive’ tariffs, Actis buys 400MW of assets

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Azure Power and Tata Power were among the winners in a reverse auction for 1.2GW of solar projects under India's ISTS programme which saw winning tariffs of INR2.43/kWh (US$0.0324).

The tender saw bids totalling around 1.7GW for projects connected to India’s Interstate Transmission System (ISTS), and concluded with developers O2 Power, Azure Power, Tata Power securing project capacities of 400MW, 300MW, 370MW, respectively. AMP Energy won 100MW.

Issued by utility NTPC in February, the auction stated that each of the projects must have a capacity utilisation factor of at least 19% and be commissioned within 24 months.

For Azure, the win comes weeks after receiving a letter of award for 2GW of additional of interstate transmission solar after a greenshoe option in an existing contract with Solar Energy Corporation of India (SECI) was exercised.

According to consultancy JMK Research & Analytics, the “highly aggressive” tariffs may be as a result of developers looking to take advantage of the recent extension of a 14.9% safeguard duty on the imports of solar cells and modules from China. However, there remains a chance of double taxation in form of safeguard duty as well as Basic Custom Duty, which was proposed to come in at 20% and rise to as much as 40% next year

Falling module prices were also cited by JMK as a reason for the low tariffs, with a widening gap in supply and demand forecasted for the coming months due to a slowdown triggered by COVID-19.

In June, record-low bids were received for a SECI tender for 2GW of contacts in India. Spain’s Solarpack was among the winners, presenting an offer for a 396MW project at a price of INR2.36/kWh (US$0.031/kWh).

Actis buys two Indian solar parks from Acme

Also in India, solar projects totalling 400MW have been acquired by London-based investment firm Actis from Acme Solar Holdings.

Located in the states of Andhra Pradesh and Madhya Pradesh, the parks have been bought by Actis’s Actis Long Life Infrastructure Fund (ALLIF).

Actis partner Sanjiv Aggarwal hailed the Indian government’s commitment to increasing renewable energy production, creating “attractive investment opportunities”. He added that the firm will continue to focus on M&A and PPA auctions in India.

Last year, Actis raised US$1.23 billion for ALLIF, with funds destined for existing infrastructure assets in emerging markets, starting with its own 100MW PV plant in Chile that was acquired from SunPower.

For independent power producer ACME, the divestment unlocks equity value to bolster its growth plans in India. The company has a portfolio of 5GW spread across multiple states in the country. 

Founder Manoj Kumar Upadhyay said: “India has a lot of potential for solar power and Acme is very well poised to tap this potential and create value for utilities and consumers.”

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