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The call for RfP concluded today and the bid prices were disclosed. Preliminary information suggests that the tariffs were in the region of about Rs. 7.49 per kWh to Rs. 9.39 per kWh (concrete numbers will be known at a later time). Some sources suggest that the lowest price was quoted by Solar Direct, Welspun was one of the winners with a rate of Rs 7.9, Rs. 8.05 and Rs. 8.14  per kWh for 50 MW. Other developers including Mahindra won projects @ about Rs.9.34 per kWh

These bid prices are astonishingly low, but somewhat predictable considering the fact that module prices (some Chinese manufacturers were offering modules at throw away prices of about 80 cents per watt peak) and solar system prices in general have cratered over the past few months.  This suggests that the capital costs are much lower than the initially anticipated numbers of close to Rs.10 crores per MW. These tariffs suggest that the capex could instead be as low as Rs. 8 crores per MW.

There may be other reasons for this including

  • Bidders might be using the forecasted price of modules which could fall even further
  • Local module manufacturers bidding for projects so that they can clear inventories
  • No local content requirement for thin films suggesting that developers going for thin films from abroad, particularly US would get financing at low interest rates of about 3-5% from EXIM bank of US

This bodes well for the Indian solar market IF the projects can get financial closure and the viability is ensured. This suggests that solar is bound to achieve grid parity much earlier than anticipated. We should see mushrooming of solar pv projects in the country as more developers are encouraged to setup PV projects.

A detailed analysis will follow. Stay tuned.