BENGALURU: Solar tariffs rose sharply from their lowest level in the latest solar auction of 860 MW conducted by Karnataka’s Renewable Energy Development Ltd (KREDL). The lowest price was Rs 2.94 per unit, way above the winning tariffs of Rs 2.47 and Rs 2.44 per unit at the last two auctions in Rajasthan in December and May last year respectively.
Though Karnataka gets lower solar radiation than Rajasthan and the winning tariff was expected to be consequently higher, the 50 paise per unit rise is striking. It confirms the view of many developers and lenders that bidding in the last few solar auctions had been too aggressive, and some correction was likely, more so because the cost of solar panels and modules has been rising in China. Around 90% of solar equipment used in India is imported, mostly from China, since it is substantially cheaper than the locally manufactured variety.
But the increase is also a pointer to the difficulties the solar segment has lately been facing. A recent re-classification of solar panels and modules by the Central Board of Customs and Excise has subjected them to 7.5% import duty, apart from various kinds of cess, while formerly they were in a category whose import was free. In early January, the Director General Safeguards also recommended imposing an additional whopping 70% duty on imported solar panels and modules, on the ground that they were causing “serious injury” to domestic manufacturing. Though the recommendation is preliminary and yet to be implemented, there is palpable worry among developers about the impact this would have on their financials and future tariffs..
The location of the 860 MW auctioned was distributed across 43 talukas of Karnataka, with 660 MW across 33 talukas auctioned under the ‘open category’, where imported equipment is allowed, and 200 MW across 10 talukas under the ‘domestic content requirement (DCR) category’ where only locally made modules are permitted. The lowest bids in the open category were by Acme Solar in Kudligi taluka and Shapoorji Pallonji at Jagalur taluka, both seeking Rs 2.94 per unit. The highest bid was Rs 3.34 per unit by Asian Fab Tech in Doddabellapur taluka. Most of the winning bids across different talukas were above Rs 3 per unit.
Of the nine winners, the biggest was Shapoorji Pallonji Infrastructure Capital with 185 MW, followed by Acme Solar with 106 MW and ReNew Power with 99 MW. The other winners were Asian Fab Tech with 85 MW, TEP Rooftop Solar India with 55 MW, Greenko with 45 MW, Eklade Solar with 35 MW, Rays Infra with 30 MW and and Max Planck Solar Farms with 20 MW.
In the DCR category, which has been plagued by several problems, the results of 100 MW across five talukas were withheld. Sources claimed they had not received bids at all. For the remaining 100 MW across another five talukas, the winning tariffs were predictably much higher than in the open category. Emmvee Photovoltaic Power got 80 MW across four talukas with bids between Rs 3.52 and Rs 3.54 per unit, while the remaining 20 MW went to Svarog Global Power at Rs 3.54 per unit.
Thus effectively, only 760 MW were auctioned across 38 talukas.
KREDL had set a base price of Rs 3.57 per unit for the auction. In Karnataka’s last solar auction in March 2016 of 1,200 MW across 60 taukas, the benchmark tariff had been Rs 6.51 per unit. Winning bids had varied between Rs 4.69 and Rs 5.81 per unit.
Source: economictimes.indiatimes
