Uncertainty over various duties has led to a jump in solar power tariff bids in India’s latest auctions.

A 500 megawatt solar power tender announced by Gujarat attracted substantial interest by project developers. Eight project developers offered to set up 1,120 megawatts. The lowest successful bid was ₹2.98/kWh (4.5¢/kWh) for a 50 megawatt project.

The range of bids placed, ₹2.98 to ₹3.06 per kWh (4.5  to 5.0¢/kWh), is in line with the recent upward trend of bids seen in auctions by various state governments. Solar auctions at the state level have been seen to receive higher bids compared to those at central level auctions.

Kalthia Engineering and Construction secured a 50 megawatt project, Gujarat State Electricity Corporation Limited won a 150 megawatt project, and ACME Solar and Azure Power secured rights to develop 100 megawatts and 200 megawatts of capacity, respectively.

The lowest winning bid in this latest auction in Gujarat was at a 12% premium to the lowest bid seen in the preceding solar power auction. The previous low in Gujarat solar power auction was 2.65/kWh (4.0¢/kWh). The lowest solar power tariff bid ever in India remains 2.43/kWh (3.67¢/kWh) for a project in Rajasthan.

Tariff bids have been on the rise due to uncertainty over several issues related to duties and taxes levied by the central government. Apart from the lingering issue of Goods & Services Tax (GST) there was an issue of around 10% customs duty on imported solar modules. The issue was resolved after the Gujarat auction was concluded.

Uncertainty also remains over the imposition of safeguards duty. A central government agency has recommended an interim duty of 70% on solar cells imported from China, Malaysia, and Taiwan. The central government agency was investigating whether to impose anti-dumping duties on imported solar cells, however, that investigation has now been suspended but may be taken up again soon.