Record Low Bids Expected In India’s 750 Megawatts Solar Power Tender

India’s solar power bids are expected to fall to a new record low with the upcoming reverse auction of 750 megawatts solar power park.

The Solar Energy Corporation of India (SECI) is expected to launch reverse auction for the Rewa solar power park in the state of Madhya Pradesh. The solar power park will be among the largest solar power parks in India although much larger parks are being planned by SECI.

The solar power tender will offer some incentives to the project developers that have never been offered till date. Successful project developers will have more flexibility to sell generated electricity compared to existing projects. A significant percentage of the planned capacity has been allocated to power distribution utilities in Madhya Pradesh as well as the Delhi Metro Rail Corporation (DMRC).

SECI will also implement a payment security mechanism so that developers are ensured of payment even if the power distribution utilities refuse to pay. The developers shall also receive payment during times of non-availability of power grid.

Additionally, the tariff discovered following the reverse auction shall undergo annual escalation of INR 0.05/kWh (0.7¢/kWh) for the first 15 years.

The solar power park will be developed in 3 phases of 250 MW capacity each, spread over a total of 1,500 hectares. Power generation from the first phase is expected to start beginning in June 2017, with the entire capacity expected to be fully operational by December 2017.

Delhi Metro has agreed to procure at least 121 million kWh electricity every year from the first phase. Once all the phase are operational, Delhi Metro may increase procurement to 363 million kWh per year.

Earlier this year, the International Finance Corporation (IFC) signed an agreement with the government of the state of Madhya Pradesh in India to provide assistance in the implementation of the solar power park. The IFC will extend its global expertise to structure and implement the transaction to help attract private investments of about $750 million. IFC’s work on this project will be supported by its partnership with Australia’s Department of Foreign Trade.

The lowest tariff bid for utility-scale solar power project in India currently stands at INR 4.34/kWh (6.40¢/kWh) in Rajasthan. There is every chance that the bids for the Rewa solar power park will be lower than the current lowest bid.

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