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Another Solar Auction in India leads to low developer interest and reasonable tariffs

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India has tendered a massive amount of solar capacity in the last one year, with intense competition leading to very low tariffs being bid. Many of these projects are finding it difficult to get financed, as the risks are high compared to the bids that have been put by developers to build a large portfolio. Many developers have found the competition too high and bids too low, and have stayed away from the solar market. They have mainly been playing in the secondary market, buying developer portfolios or stakes in individual projects. This line of thinking has also seemed to dawn on other players who have also reduced irrational bidding, though some companies such as the Adani and others continue to bid low to establish a toehold in this massively growing industry.

solar farm

A recent reverse auction in Gujarat conducted by SECI under Viability Gap Funding (VGF) saw only 3 bidders participating in the tender. They also bid for relatively high VGF which would make equivalent tariffs at more than INR 5/kWh, which is almost 15% higher than the lowest bids that were seen a few months ago in Rajasthan. It is to be noted that the Charanka solar park in Gujarat is considered to have high fees and that also may be a reason why the bidding was tepid. 50% of the total capacity of 160 MW that was put up for tender was won by a local state utility. Gujarat State Industries Power Corporation is a state owned company and may get favorable terms in the park, as compared to other private players like Mahindra and Orange who had also bid for this tender. While the players did not touch the upper limit of VGF of INR 1 crore/MW, they were all close at between INR 68-77 lakh/MW range.

Read more about Solar parks in India.

It cannot be said for sure that the Indian solar market will become rational now and developers will not indulge in price wars, given that a large number of companies have committed to huge targets and investments into the solar sector. A number of these companies are backed by large global pension and and investment funds and have mandate to develop large gigawatt portfolios. If they do not meet the target, the management in these companies may not be able to justify their salaries.


Gujarat Industries sought VGF of Rs 67.99 lakh per MW for one project and Rs 69.75 lakh per MW for the other. Orange Renewables sought Rs 70.25 lakh per MW and Mahindra Rs 77.77 lakh per MW, a top official of SECI said. In four solar auctions held by SECI this year in Maharashtra, Uttar Pradesh, Andhra Pradesh and Chhattisgarh, the tariffs quoted did not drop below below the reserve price of Rs 4.43 per unit.


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

One Response so far | Have Your Say!

  1. Radhakrishnan Mundoli

    If the projects does not become a reality due to the low tariffs they management have committed, they should be thankful that they are not asked to pay back the salaries they had enjoyed.