India to introduce a cap on solar tariff and reduces tender size for manufacturing unit

In a major development, the MNRE has directed the Solar Energy Corporation of India(SECI) to fix the upper permissible solar tariff at INR 2.50/kWh and INR 2.68/kWh for developers using domestic cells & modules (without safeguard duties) and imported products (with safeguard duties), respectively. SECI has reduced its solar manufacturing tender size from 5 GW to 3 GW and curtailed minimum bid capacity from 1 GW to 600 MW. However, the size of the PPA remains the same at 10 GW. This comes to post an announcement by the Power  Minister – that all the future renewable energy projects bid would have to cover at least a 50% of a project’s components with domestic manufacturing. Regarding the PPA, it must be executed within a maximum time frame of 90 days from the date of award and a minimum of 40% of commissioned within 21 months from the date of PPA signing. The remaining 60% of the capacity will have to be commissioned within 36 months from the date of the bid award letter. SECI has also revised the time allowed to set up manufacturing capacity to two years from the earlier three-year time period.

  • For silicon-based facilities, the module manufacturing unit has to be set up in India whereas polysilicon can be imported.
  • For non-silicon-based technologies, the primary functional raw material can be imported.

To support this development SECI has announced a 5 MW solar manufacturing tender linked to a 10 GW PPA, also in June. It was the first solar tender where developers were required to locally produce equipment in order to win projects.

Lowest ever tariff of Rs.1.58 discovered at RESCO model tender in Madhya Pradesh

The latest tariff discovered for rooftop solar at Power Grid Corporation in Madhya Pradesh is INR 1.58 kWh/unit. This is the lowest tariff discovered so far in the country. AMPSOLAR, a New-Delhi based company bid for the lowest tariff for putting rooftop solar plants on the 10 government buildings. The highest tariff of INR 4.3 kWh/unit was by Renew solar for a private company. The tender auctioned under the RESCO model attracted 31 international as well as domestic developers who oversubscribed the 35 MWp tender capacity by 630%. The project will get a subsidy from MNRE of 20% and 25% from the state government.

In a RESCO model, the Bidders intend to use a Premise owned/used by the Procurer and enters into the PPA with Procurer for the supply of solar power as per RFP.

List of bidders and tariff is as below:

Establishments Tariff  (KwH/unit)
Municipal buildings Rs 1.69
Medical colleges Rs 1.74
Police establishments Rs 2.33
Government engineering colleges, ITIs, and polytechnics Rs 2.35
private institutions Rs 2.28

“The solar rooftop sector has been struggling with issues like the significant upfront cost for individual consumers and lack of enabling the framework for Independent Power Producers (IPPs) to develop a scalable business model. The bid results for 35 MWp Solar Rooftop tender are testimony to numerous policy, contractual and procedural innovations deployed in the RESCO programme to find solutions to these gaps,” said Manu Srivastava, principal secretary, renewable energy, in the Madhya Pradesh government.

Read the corrigendum document and detail list of bidders here.

MERC announces generic tariff for various RE sources

Recently the Maharashtra Electricity Regulatory Commission (MERC) announced an order for generic tariff determination of various renewable resources including Solar and Wind. Even after the generic tariff is realized, DISCOMs opt for competitive bidding for tariffs due to the low rates. The details regarding the tariffs for various RE sources is a follows:

Renewable energy sources

Tariff without AD Tariff with AD
Non-Fossil Fuel-Based Cogeneration Projects INR 4.99 _
Biomass projects INR 7.30 INR 7.44
SHP (5 MW-25 MW) INR 3.66 INR 3.92
SHP (1 MW-5 MW) INR 4.36 INR 4.64
SHP (500 kW-1 MW) INR 4.86 INR 5.14
SHP 500 kW and less INR 5.36 INR 5.64
Wind Energy projects INR 2.87
Utility-Scale Solar PV Projects INR 2.72

Rooftop Solar PV projects INR 3.22

The above mentioned solar rooftop tariff will be applicable from August 1 2018 to March 31 2019 and for wind projects between August 1 2018 – March 31 2019 for  a period of 13 years from the date of commissioning. However, in a recent project auction base tariff of INR 2.52/kWh was discovered (INR 0.35/kWh less than the new generic tariff).

In case of SHP, the above-mentioned tariffs will be applicable between August 1, 2018, and March 31, 2019, for 35 years (with capacity up to 5 KW) and 13 years for SHP with a capacity greater than 5 MW and up to 25 MW.

Recently Maharashtra also announced its final regulations for the forecasting, scheduling and deviation management regulations in July 2018.

HPERC DETERMINES GENERIC LEVELLISED TARIFF FOR SOLAR PV PROJECTS

Himachal Pradesh Electricity Regulatory Commission (HPERC) has determined the regulations for determination of generic levelised tariff for solar PV projects. The tariff has been determined in parts.

 

  • Tariff determined for the Solar PV projects applicable from 01.04.2017 to 30.09.2017 is as follows:

The capital cost has been determined at Rs 446 lakh/ MW and the tariff determined is:

 
  • Tariff determined for the Solar PV projects applicable from 01.10.2017 to 31.03.2017 is as follows:

The capital cost considered for solar projects is 446 Lakh/ MW for projects above 1 MW to 5 MW and 452.70 lakh/ MW for projects over 1 MW capacity. The tariff determined is as follows:

In comparison to the tariff of previous years, there has been a steady decrease of 17%. The following graph shall make this clearer:
 
The order can be accessed here.

SUBSIDIES IN THE RE SECTOR

Encouraging RE installation in the state, till now, the country’s policies have provided various benefits in the form of subsidies, generation based incentives, viability gap funding, etc.As the installed capacity of solar and wind energy has been increasing consistently, the government has consistently decreased the incentives to renewable energy.

Now that the prices of electricity generated from renewable energy has come very close to the price of electricity generated through fossil fuel based sources, almost achieving grid parity, the government is considering removal of subsidies and incentives given to installation and generation from renewable energy. This change may take place in the coming financial year, as per experts. This development has been reported by the Economic Times.

The wind tariff recently dropped down to Rs 2.43 per unit in an auction held by GUVNL in the month of December 2017 and solar tariff dropped down to Rs 2.65 per unit in September.

GUVNL’S BIDDING FETCHES TARIFF OF Rs 2.65

In a bidding which took place on 19th September 2017 for a 500 MW solar plant of Gujarat Urja Vikas Nigam Ltd. (GUVNL), the lowest price determined was Rs 2.65 per unit. This was slightly higher than the price of Rs 2.44 determined in the last reverse bidding by SECI. This increase in the price determined was attributed to the implementation of GST and the increase in the cost of solar panels being imported from China.

A continuous decreasing trend has been seen in the tariff determined for solar projects in the Country this year. The following graph determines the trend in prices of solar power determined in the past:

The article can be accessed here.

STATES IN INDIA BARRED FROM CANCELLING PPAS

The Government has barred the states in India from arbitrarily cancelling PPAs and has also imposed a penalty of 50% of the tariff. This notification has come after six states in the last two months have cancelled or renegotiated PPAs signed at higher prices. This is a welcoming move as it will make sure that the renewable energy sector keeps growing and the government is able to install 175 GW renewable energy by 2022.

 

The article covering the same can be accessed here

SOLAR TARIFF HITS ANOTHER NEW LOW

Solar tariff has hit another low in the auction held for the solar park in Rajasthan’s  Bhadla. The top slot was won by ACME, a domestic company for Rs 2.44 a unit for 200 MW. SoftBank Energy closely followed at Rs 2.45 for 500 MW. As per the analysis given in an article by Business Standard. there has been an 80% fall in solar tariff since the past 6 years.

 

As per a Livemint article, this drastic reduction in solar prices has caused a decrease in the number of clean energy deals as there is a fear that the DISCOMS will not honor the Power Purchase Agreements (PPAs) signed earlier at a higher rate since this has happened in the past.

A link to our previous analysis can be found here and here.

SOLAR POWER TARIFF HITS A NEW LOW

During the auction for a 250 MW capacity for Adani Renewable Energy Park in Bhadla, Rajasthan, the solar tariff fell to a new low of Rs 2.62 per unit. The previous low in tariff was  at an auction in Andhra Pradesh where the price was set at Rs 3.15 per unit. In the auction, Phelan Energy Group and Avaada Power, companies based in South Africa won the bid to build capacities of 50 MW and 100 MW by bidding at Rs 2.62 kWh per unit.

This low also beats the average price of power generated at the coal based plants owned by India’s largest power generation utility, NTPC Ltd. India is set to come to the position of being the third-biggest solar market globally in 2017 to  fulfill the 8.8 GW capacity addition projected for the year.

The article can be accessed here.

Our analysis of the previous lows seen in solar tariff can be accessed here.

MERC DETERMINES LEVELISED TARIFF FOR RENEWABLE SOURCES FOR FY 2017-18

The Maharashtra Electricity Regulatory Commission has released an order for the generic tariff for renewable energy for FY 2017-18. It specifies the terms and conditions and procedures for determination of generic tariff by the commission. The capital cost for wind energy projects has been determined on the basis of revised capital cost given by CERC. The value for capital cost is Rs 594.41 lakh/MW.

The valued for tariff decided for wind energy projects is as follows:

 

In the order, the capital cost for solar PV has not been determined by the CERC. Therefore, the state electricity commission determined the value of capital cost at Rs 424.74 lakh/MW. The normative capital cost for solar thermal projects is Rs 1200 lakh/MW. The table given below specifies the value of tariff for solar projects :

 

The order can be accessed here.

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