Gujarat’s latest 500 MW solar auction serves up a low tariff

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The latest, 500 MW auction held by Gujarat Urja Vikas Vigam Ltd (GUVNL) prompted aggressive bidding, with the U.S.-based UPC Energy Group securing a 50 MW cut of the allocated capacity at the lowest tariff of Rs2.55/kWh.

The highest accepted tariff was the Rs2.68 ReNew Power quoted for 105 MW of capacity. Orange Renewable – with 120 MW; Gujarat State Electricity Corporation Ltd (75 MW), and Adani Green Energy (150 MW) won bids at Rs2.67/kWh.

The auction was oversubscribed by 545 MW as bids totalling 1,045 MW of capacity were submitted.

Last month, the Gujarat state government cancelled a 700 MW auction because of the resulting “high tariff” after the Softbank-backed SB Energy appeared to have secured some 250 MW for Rs2.84/kWh. Finland’s Fortum – pursuing 250 MW of capacity – and France’s Engie (200 MW) had quoted a price of Rs2.89.

Rollercoaster ride

Barely five months ago, a 500 MW auction in the state touched a lowest price of Rs2.44/kWh. The steep rise subsequently seen at the 700 MW procurement irked GUVNL. Developers attributed the price hike to high charges levied at the state’s Raghanesda Solar Park, where the 700 MW of projects had to be located. Previous auctions concerned projects which could be established anywhere in the state.

In its newly announced land policy, Gujarat has mandated the establishment of wind parks and areas for wind-solar hybrid projects. According to the policy, all future centrally-secured solar, wind and solar-wind hybrid projects will have to be built in such locations.

To meet the renewable purchase obligation targets of its utilities, Gujarat plans to have operational solar capacity of 5.5 GW plus an additional 1.5 GW of wind energy capacity by March 2022.