Gujarat Urja Vikas Nigam Ltd (GUVNL) held the reverse auction on March 28 to allot 500 MW of solar projects.
Bengaluru: Gujarat cancelled a solar project auction it held in end-March without assigning any reasons. Industry sources said this was because the state government felt the tariff quoted by bidders to supply power was too high.
Gujarat Urja Vikas Nigam Ltd (GUVNL) held the reverse auction on March 28 to allot 500 MW of solar projects. Gujarat-based Kalthia Engineering & Construction quoted the lowest tariff of Rs 2.98 per unit to win 50 MW, while the Gujarat State Electricity Corporation, which has also turned solar developer, got 150 MW at Rs 3 per unit. Acme Solar Power won 100 MW and Azure Power the remaining 200 MW, both quoting a tariff of Rs 3.06 per unit.
GUVNL did not reply to queries about why the auction results were unexpectedly cancelled. Sources said the agency hoped to hold the auction again after setting a reserve price lower than the winning tariffs.
The winning tariffs were markedly higher than those in the previous GUVNL auction held in September 2017, when they had ranged between Rs 2.67 and Rs 2.69 per unit.
A number of factors are responsible for the tariffs going up, including the rising cost of imported solar panels and modules, as well as the threat of safeguard duty and antidumping duty being imposed on such equipment. Around 90% of solar equipment used in Indian projects is imported, mainly because local manufacturers cannot compete on either volume or price. However, local manufacturers have complained to the Directorate General, Safeguards, and the Directorate General of Antidumping and Allied Duties that solar imports were causing them serious injury. The DG Safeguards, in turn, has recommended a 70% safeguard duty on solar imports, but the proposal is still being considered.
The 500 MW auctioned by GUVNL in March was oversubscribed three times, in stark contrast to other recent state solar auctions such as those by Maharashtra and Karnataka which evoked tepid interest and didn’t find enough takers. Industry observers attributed this to Gujarat not having set any reserve price for the auction, unlike Maharashtra and Karnataka, which did.
In the absence of a reserve price, tariffs in the Gujarat auction rose around 13% from the previous auction of September last year. But if such a price is set during the re-tendering, industry observers said they weren’t expecting such a strong response.
Source: energy.economictimes.indiatimes
