SunEdison shining in India
SunEdison has made a very smart power sales deal in India at a power purchase price of Rs 6.49 (~10c/kWh), with one of India’s largest private sector power distribution utilities based out of India’s national capital of Delhi. The deal was stuck for 180 MW of solar power plant with electricity output for a period of 20 years. The price was also quite high at Rs 6.49/kWh. SunEdison will build a plant in India’s central state of Madhya Pradesh and sell it to the national capital. Note Madhya Pradesh is seeing a solar power installation boom, as the state government has given numerous incentives. There are no wheeling charges and no electricity duties on solar power sales. There is also open access allowance for solar power, which means that solar energy generation can be sold to any other place in the state and outside. MP also has got a good amount of land at cheap prices which makes building solar power plants quite attractive in the region.
Read more about SunEdison’s recent ventures in India:
SunEdison goes on a wind energy acquisition overdrive
Will SunEdison really build an integrated Gigawatt silicon Solar Panel factory in Kutch, India
The deal was extremely smart of SunEdison as a recent reverse auction for 300 MW of solar power in MP saw prices as low as Rs 5/kWh (7c/kWh). This means that SunEdison got a 40% higher price for solar power sales from the same region. I am assuming that the costs of building and operation the solar power plant will be the same as the bidders in the solar tender who got prices in the range of Rs 5-5.5/kWh.
SunEdison has been playing the smart game in the Indian solar power market. It is not bidding too low in the solar power auctions. It wants to keep its margins up and is only going for those prices it finds remunerative enough. SunEdison has won tenders in Telangana and other state auctions which have not seen such vicious price wars between bidders.
The only question in my mind is why Tata Power bought such expensive power when it knew that power could be bought at much lower prices. There was no competitive process in buying that power from what I know. Adanis have already come under heavy criticism for selling power at Rs 7/kWh to the government of Tamil Nadu, when they bid for just Rs 6/kWh in MP. The government there is facing allegations of corruption. There has not been a similar hue and cry in Delhi but don’t think it would take too long.
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thanks.
i have some propisals fir solar projects in maharashtra.
i need to visit in your office in Ahemedabad.
pl advise.
gopinathan
heritage holdings limited.hong kong.
If I am not wrong, there was a bidding, and SunEdison was L1. This was done some 9 months back and the power price also reflects prices prevalent at that time. Always in India, there is a delay between finalising bids and signing PPAs, same thing has happened here and it will be unfair to the developer if the winning bid is cancelled now for delays done by the duscom.
Regarding Adani’s deal in TN, it’s ridiculous to single them out. There is a feed in tariff sort of mechanism in place in TN and any developer can approach government to sign PPAs at that price. The price is determined by TN government, Adani’s had no role to play in that. Neither are they the first developers to sign PPA at that price there. Players like Welspun, SunEdison have already signed and started work too. Moreover, while talking about tariffs, we need to keep in mind the specific risks and costs involved for different states. A MP discom has much better financial health and payment track record than TN (which has terrible track record with delays mounting to more than a year or so), land in MP shall be much cheaper compared to TN and evacuation in MP is much easier (your article itself mentions the favourable policies towards evacuation in MP). All in all, cost of setting up a solar power plant in TN is much more than that in MP and has much higher risks (cost of funding is also much higher as most banks won’t fund projects in TN because of poor payment track record of discom). We need to view tariffs keeping such points in mind, rather than making such generic statements.
Disclaimer: I am no supporter of Adani or SunEdison, have no interest in their shares etc. All my points above are only for the sake of getting rid of unnecessary witch hunting that is prevalent in this country in name of getting rid of corruption
Anirban