Bookmark and Share

Has Indian Solar Market returned to Irrational Pricing or is 8c/kWh the new Normal

0 Comment

The Indian solar market has become remarkable over the last one year, with solar bid prices falling in a narrow range and large developers starting to dominate the solar auctions. This was in sharp contrast to JNNSM central solar auctions in earlier years when developers had bid irrationally low prices, as many of them did not have experience in solar energy development and wanted to make a mark in the hot emerging solar market. Though people had bid low, most solar PV projects got completed as solar panel prices crashed allowing developers to build the projects despite very low prices that they had bid. This was in sharp contrast to thermal power, where many of the large giant ultra-mega power projects either did not get built or went into huge losses as coal prices climbed sharply.

The recent solar power auctions in Madhya Pradesh once again saw the return of the excess competition era, with prices bid as low as Rs 5.05 /kWh ( around USD 8c/kWh) when in the last auction prices were more in the range of Rs 6/kWh. The auction saw around 100 players participating and more than 3000 MW were bid, despite just 300 MW of solar power plants being on offer. There was a large mix of competition with large foreign developers, domestic developers and even small companies participating in the auction. The range of bids was also quite wide with bids between Rs 5-7/kWh. Most of the large developers such as First Solar, SunEdison, Adanis etc. did not get a single MW in the auction. With solar auctions becoming the preferred way of building solar power capacity, large developers have a problem on their hands due to excess competition.

Many companies such as Essel Infra, SunEdison etc. have committed to bid massive capacities but given the trend, they may not reach a fraction. Tamil Nadu government is already facing severe criticism for not awarding the 648 MW solar capacity through solar auctions. Their deal with Adani for Rs 7/kWh is certain to be scrapped. This means that unlike wind power which got fixed feed in tariffs, solar power will keep going the solar auction way.

This means more pain for developers and good times for consumers. While a lot of people have criticized the low bids saying that they will lead to bad quality projects and is not sustainable, I think it is. While some developers may get burnt, the trend of lower prices is here to stay. Solar bid prices in USA, UK and Middle East have ranged from 4c-8c/KWh. While Indian interest rates are higher, the labor cost is cheaper. 8c/kWh has become the new normal for solar prices in India.

Winning Bids

SN Bidder Total Bid Capacity
No of Bids Fin Bid Capacity (MW) 3717 Cumulative MW Fin Bid (INR/kWh) Allocated MW
1 Sky Power South East Asia Holding 2 Company Limited 150 3 50 50 5.051 50
2 Sky Power South East Asia Holding 2 Company Limited 150 3 50 100 5.109 50
3 Sky Power South East Asia Holding 2 Company Limited 150 3 50 150 5.298 50
4 Narbheram Vishram, Kolkata 30 2 20 170 5.380 20
5 Narbheram Vishram, Kolkata 30 2 10 180 5.398 10
6 Narendra Kumar Khanna, New Delhi 2 1 2 182 5.451 2
7 Made Easy Education Private Limited, New Delhi 10 1 10 192 5.452 10
8 Fluid Con Engineers, Jaipur 2 1 2 194 5.456 2
9 Rays Power Expert Private Limited, New Delhi 12 1 12 206 5.457 12
10 Design Co, New Delhi 14 3 5 211 5.610 5
11 Renew Solar Power Private Limited, Gurgaon 300 6 51 262 5.630 51
12 Hero Solar Energy Private Limited, Okhla 75 2 50 312 5.641 38



Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

No Responses so far | Have Your Say!