SunEdison makes record-setting solar bid in India, to delight of energy minister

PV Magazine

Indian solar market observers have described SunEdison’s reported bid of INR4.63/kWh (US$0.0706) for a 500 MW PV power plant project in the southern Indian state of Andhra Pradesh as “very unexpected” and in the “realm of unattractive investments.” The bid, while capturing headlines, indicates the levels to which developers will go to capture Indian market share.

Low solar power project bids frequently attract attention, heralding solar energy’s every increasing march towards competitiveness with incumbent electricity generation sources. However, reports of SunEdison’s bid of 7.06 cents/kWh has caused some industry observers to question the viability of projects at such a low price.

Reuters reported today that SunEdison won the reverse auction for 500 MW of PV projects in the state of Andhra Pradesh, with a USUS$0.0706 cent bid. Coal and renewable energy minister Piyush Goyal tweeted his pleasure at the result.

“Delighted that an all time low solar tariff… has been achieved during reverse e-auction…,” tweeted Goyal, in reporting by India’s Economic Times. However, some industry observers were less impressed by the result.

“Developers in India are getting very aggressive to capture market share as there have been a dearth of new projects to bid for,” Mercom Capital CEO and co-founder Raj Prabhu told pv magazine. “SunEdison’s record low bid of INR4.63/kWh is still very unexpected.”

“Almost none of the solar project developers or banks in India think that a project at these low tariff levels can result in attractive returns or any returns for that matter,” Prabhu continued.

SunEdison is an experienced project developer and few would doubt its ability to execute on solar park projects efficiently and cost effectively. Furthermore, the state of Andhra Pradesh has established solar project infrastructure with some in excess of 250 MW of solar PV having already been developed in the southern state.

Despite this, Mercom’s Prabhu remains skeptical of the value in bidding such a low price for the 500 MW project.

“Considering SunEdison’s recent financial troubles, the expectation was that they would only focus on projects that bring attractive IRRs,” said Prabhu. “Leading the race to the bottom in terms of tariffs in India is not where you want to be.”

In advance of the reverse auction, consultants Bridge to India had considered the bids submitted under the tender. It’s analysis concluded that with around 5 GW of projects due for auction in the next three months, that bids below INR5.40/kWh  were unlikely.

“Trina Solar is believed to have quoted the lowest tariff of INR 5.21/kWh, followed by developers such as First Solar at INR 5.35/kWh, SunEdison at INR 5.37/kWh, Energon at INR 5.39/kWh, Renew Power at INR 5.39/kWh, Aditya Birla at INR 5.45/kWh, Essel Green at INR 5.49/kWh and Tata Power at INR 5.49/kWh, all quoting tariffs below INR 5.50/kWh,” wrote the Bridge of India analysts. Given this reporting before the reverse auction closed, apparently SunEdison further reduced its bid.

Bridge to India also concluded that bids below INR5.25/kWh (US$0.08/kWh) would not be an attractive investment.

Source: PV Magazine. Reproduced with permission.