Just weeks after the Indian government exempted import solar modules from custom duties, the impact of the decision was seen in the substantial fall in tariff bids.

The latest auction completed by India’s largest power generation company — NTPC Limited — for a large solar power park in southern India saw developers reducing tariff bids by around 9% compared to bids seen in auctions just before the custom duties were repealed. 

NTPC Limited had offered developers 750 megawatts of capacity at Ananthapuram solar power park in the state of Andhra Pradesh. As per the tender conditions, developers could bid for a minimum capacity of 50 megawatts and maximum of 750 megawatts.

Against an offered capacity of 750 megawatts, a total of 11 developers submitted bids to set up 3,500 megawatts of capacity. Nine of these developers submitted bids to develop 250 megawatts each, one proposed to set up 500 megawatts, while one another bid for the entire 750 megawatt capacity.

The oversubscription of the tender is good news for the Indian solar power market. Auctions for at least two large tenders were postponed multiple times over the last few months as they did not receive enough bids to cover the entire capacity on offer.

Karnataka Renewable Energy Development Limited (KREDL) had offered 1,200 megawatts of capacity at Pavagada solar power park. Even after multiple postponements the tender managed to attract bids for just 550 megawatts. These projects, won by ReNew Power, Azure Power, and Avaada Energy, received bids of around Rs 2.93/kWh (4.35¢/kWh).

The state of Gujarat also auctioned 500 megawatts of capacity earlier this year. Bids for these projects ranged from Rs 2.98 to Rs 3.06/kWh (4.42¢ to 4.54/kWh). Another state, Maharashtra, offered 1 gigawatt of capacity last year and had been forced to postpone the auction multiple times as it did not receive enough bids to cover the entire capacity. Gujarat cancelled the auction, stating that the tariff bids were high. It plans to hold the auction again soon.

Now, finally, Maharashtra has received enough bids to cover the entire capacity on offer. A total of eight developers have proposed to set up 1,450 megawatts of capacity. The actual auction is expected to take place soon now.

In the NTPC tender for Ananthapuram solar power park, Sprng Energy, Ayana Renewable, and SB Energy secured rights to develop 250 megawatt capacity each. These companies won these projects at tariff bids of Rs 2.72-2.73/kWh (4.02-4.05¢/kWh). That is a decline of around 7% compared to KREDL bids and 11% compared to Gujarat bids.