India solar auction attracts 16 bids below 7c/kWh

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Auction for 130MW large-scale solar in Rajasthan sees winning bids at extreme lows of (AUD) 8c/kWh (INR 4.35/kWh, USD 0.065) this week.

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A solar auction for 130MW of large-scale PV in the Indian state of Rajasthan has seen the winning bids return to extreme lows of (AUD) 8c/kWh (INR 4.35/kWh, USD 0.065) this week.

PV Tech reports that the auction, held by India’s largest utility, NTPC, was for capacity outside solar parks and the three successful players were all Indian firms – see table below.

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The three bids come in just a touch higher than the lowest ever solar bid in India, which came from Finland’s Fortum Finnsurya Energy at a price of INR4.34/kWh – also for capacity in Rajasthan.

The world’s record lowest ever large-scale solar bid – below (USD) 3c/kWh ($US30/MWh) – was recorded in Dubai, in a May auction for 800MW of solar capacity.

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As we reported here, the record low bid came from a consortium comprising Abu Dhabi renewable energy developer Masdar and Spanish developer FRV, which was acquired by Saudi Arabia’s Abdul Latif Jameel (ALJ) group in 2015, and which has built two large-scale solar farms in Australia – the 20MW Royalla facility in the ACT and the 56MW Moree solar farm in NSW.

In the Rajasthan auction, the report notes that all 16 developers who bid in were willing to offer below five rupees per unit.

“This was an NTPC [auction] so it was expected that it would be aggressive,” said Jasmeet Khurana, associate director of consulting at Bridge to India.

However, Khurana said the bids were still slightly lower than expected.

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12 Comments
  1. Brunel 2 years ago

    When are the prices going to be close to the levels in Dubai.

    • Ronald Brakels 2 years ago

      Well, the cost of capital in India is around 9% while in Dubai it might only be 1%, so even if all other costs are identical it will be more expensive in India. But I expect interest rates in India to decline as their economic development proceeds further. But if I could know when that would happen I would own my own yacht instead of just bumming rides on my friend Gina’s.

      • Brunel 2 years ago

        Maybe allowing FDI in solar farms would help.

        • Someblah 2 years ago

          As far as I know, India recently passed a law that allows 100% FDI in the entire renewables sector, including solar energy. In fact, they would be giving free land to all companies that bid for these projects, provided the projects contracts are implemented within 4 weeks of bids.

          My bet is these prices are to fall even further…

          • Brunel 2 years ago

            Free land could be a rort.

            I thought desert land is already cheap.

          • Someblah 2 years ago

            Well, these projects are not set in deserts but closer to population to reduce transmission losses. So far, most of these have used government owned barren lands.

            There have been studies in California that have claimed that solar projects are best placed on water bodies like lakes that improve cell efficiency by natural cooling and even reduce water loss. In fact, they already had a project in Gujarat on Narmada river. I am not sure what is the status of that currently.

          • Brunel 2 years ago

            UHVDC only loses 10% per 3000km.

            So you could put solar panels in the desert. And even in Iran and transmit the electrons to India.

          • Someblah 2 years ago

            UHVDC is impressive, but still pretty expensive. The 10% loss does not take infrastructure cost into consideration.

            In China’s case for example the UHVDC projects cost roughly 40-50 billion USD, which is much more expensive than building new rail road for coal transportation. In India-Iran fictional scenario that you mentioned, costs would escalate upwards of 100 billion USD, simply because of land, royalties, security, maintenance, etc. (even if we ignore the elephant in the room called “P…”) At that price point, local projects would be more attractive.

          • Brunel 2 years ago

            India has UHVDC lines. Clearly they felt that the cost is worth it. It requires less land and pylons than normal high voltage AC lines – probably less metal/copper too.

            They were thinking of importing electrons from Pakistan before:

            “Cotton and electricity are the only two items we require from Pakistan,”

            http://www.rediff.com/money/2005/aug/06pak.htm

            If India is buying electrons from Pakistan, it is in Islamabad’s interest to make sure the electrons are delivered – or there is no profit in it for Pakistan.

          • Someblah 2 years ago

            To your first part, true.

            >> it is in Islamabad’s interest

            Which one? Army, Government, ISI, Terrorists —- all 4 have different interests in Pakistan, and all 4 act on their own interest. While govt.’s interest may be to put up the pylons and make money, Lashkare-Taiba would rather pull them down. They can’t even agree to play a cricket match with Srilanka there, and you are talking about business with India 🙂

      • Someblah 2 years ago

        Well, land is provided free in Dubai, with cheap financing. Also, energy efficiency is also higher because of high solar insolation (which is comparable in some arid/relatively-hot Indian states like Rajasthan and Gujarat, but not all).

        But then, the cost of setting up and maintenance is lower in India. Rates don’t impact much now, considering external financing and 100% FDI. But I think the next biggest price reduction would be guided by improving efficiency of solar cells and cheaper production in India.

        • Ronald Brakels 2 years ago

          Even with FDI foreign investors will be looking for the most bang for the buck they can get and that means the cost of financing will be higher in India than the UAE. But I do expect financing costs to fall in India in the future.

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