Latest 1.2 GW of solar capacity awarded at Rs2.54 ahead of safeguarding duty fall

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The latest 1.2 GW solar auction conducted by the Solar Energy Corporation of India (SECI) prompted a lowest tariff of Rs2.54/kWh, slightly below the Rs2.55 seen in February’s procurement.

Four companies secured capacity at Rs2.54, with Ayana Renewable Power, ReNew Power and Azure Power bagging 300 MW each and Mahindra Susten 250 MW. Avaada Energy claimed the remaining 50 MW, at Rs2.55, in an auction which had a Rs2.65/kWh tariff ceiling.

A SECI auction in July saw ACME Solar secure 600 MW of capacity by equaling the nation’s record low tariff of Rs2.44. That benchmark had been set in May 2017, in a SECI auction for capacity at the Bhadla Solar Park.

While the winning tariffs in the latest 1.2 GW auction were above the Indian record, they were distinctly lower than the Rs2.70-plus figure seen in some recent tenders. Cost pressures have eased with the safeguarding duty applied to non-Indian solar modules and cells due to fall to 20% next month.

“As the safeguard duty rate declines to 20% from July 2019, it would give developers who participate in auctions post January 2019 the leeway to procure when the rate is lower,” predicted a report by ratings agency Crisil Research, published in pv magazine. “The same would hold true when rates go down to 15% after January 30, 2020. Hence, over the long term, once duty rates decline – as they should in a time bound manner – cost pressures would ease and tariffs would also start easing by 5-10 paise per unit.”