India’s Ministry of New and Renewable Energy has awarded PV project contracts worth 350MW to 28 developers in its latest National Solar Mission (NSM) auction. Projects in batch II of phase II were allotted by a reverse bidding process and have an initial completion deadline of March 2013.
The maximum capacity of systems in this latest auction was 20MW, although developers were permitted to bid for an additional two projects and a further 30MW of capacity. Welspun Solar was the only solo bidder to take up this option, securing one 20MW (with a tariff bid of INR7.97) and two 15MW projects (tariffs of INR8.05 and INR8.14).
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Other successful developers were Azure Power, Solairedirect, GreenInfra Solar Farms and the joint venture of Mahindra Solar One and Kiran Energy. Together the latter two captured over 50MW of capacity – a 20MW and 15MW project were won under Mahindra’s name while another 20MW system was awarded to Kiran.
The average tariff bid for batch II was just INR8.7 per unit, a 27.5% fall from the corresponding figure for batch I. This dramatic drop mirrors the international trend of falling PV equipment prices, which, according to consulting firm Bridge to India, has enabled developers to consider capital costs as low as INR90 million for every MW installed. Additionally, developers appear to be leveraging on deferred payment schemes offered by module manufacturers and low interest rates possible on the strength of their balance sheets.
The auction’s results illustrate just how quickly the cost of solar in India is closing in on that of coal. And, if prices in India continue to fall at the current rate, this cost difference could disappear completely by 2014 or 2015, according to Bridge to India's Mohit Anand.
“Manufacturers are keen to offer discounts and to defer payments because things are so competitive right now,” Anand said. “Costs are going down and that’s really reflected in these bids.”