Totally there were five bidders in the auction, including two domestic developers who both left empty-handed
The solar auction conducted by Gujarat Urja Vikas Nigam Ltd (GUVNL) on Friday turned out to be a big disappointment for the domestic players. Foreign developers won the entire 700 MW solar project bid by offering considerably lower and more competitive rates.
While the Softbank-backed SB Energy won 250 MW project at the lowest tariff of Rs 2.84 per unit, Finnish developer Fortum bagged 250 MW and French major Engie got 200 MW, both offering the same price of Rs 2.89 per unit.
In September this year, GUVNL had witnessed the lowest winning tariff of Rs 2.44 per unit when it conducted an auction for 500 MW.
However, the rise of 40 paise this time has been welcomed by developers and analysts who see it as a positive sign.
“That the tariff has gone up is an encouraging sign. It means that sanity has returned into the market. People are now pricing in the higher cost of capital, and the volatility of the currency,” a developer told ET on condition of anonymity.
Reasons behind increased tariff
One main reason as mentioned by the national daily is that panels and modules used in Indian solar projects are mostly imported ones.
Also, unlike those of the last auction, experts said that these new projects are required to be located in a solar park.
According to Vinay Rustagi, managing director at solar consultancy Bridge To India, the tariff is 40 paise higher because of solar park charges.
He also noted that the competitive intensity between developers has reduced to some extent. As several large developers have already built substantial pipelines of solar projects this year, they are now less eager to win projects at any cost, Rustagi said.
Earlier in March, GUVNL had cancelled the results of a solar auction after it found the tariff too high. The lowest tariff offered at that time was Rs 2.65 per unit in non-solar park areas.
Total bidders
Totally, there were five bidders in the GUVNL auction, including two domestic developers who both left empty-handed.
The strong participation of foreign companies is attributed to GUVNL’s reputation as having the best financials among all state discoms.
“GUVNL is the best-rated discom in the country. International developers largely focus only on auctions conducted by central agencies like SECI and NTPC and the best rated discoms,” Rustagi was quoted as saying.
