Solar tariff drops below INR 2/kWh


News agency PTI has reported that the 500 MW solar auction by Gujarat Urja Vikas Nigam Ltd has yielded a new record low tariff of INR 1.99/kWh in India.

The new tariff is 0.5% lower than the previous record of INR 2/kWh secured in a 1.07 GW auction held by the Solar Energy Corporation of India (SECI).  

The 500 MW procurement exercise saw state-run power producer NTPC (200MW), Aditya Birla Renewable (120 MW), Torrent Power (100MW), and Saudi Arab’s Aljomaih Energy and Water Co. (80 MW) placing the lowest bids of INR 1.99/kWh each, reported PTI.

GUVNL floated the tender in September. As per the tender document, projects can be set up anywhere in Gujarat. “[The successful] bidders can select the location of their projects and substations from an available-capacity list on the Gujarat Energy Transmission Corporation Limited (GETCO) website,” it read.

Contributing factors

Interestingly, during FY2020-21, solar power tariffs have hit a new low one after another auction. Tariff declined to INR2.36/kWh in June-July 2020 and further to INR2.0/kWh in November 2020, with INR 1.99/kWh touched recently.

An India Ratings and Research (Ind-Ra) report attributes the continuous decline in Indian solar power tariffs since the start of FY2020-21 to a mix of structural and state-specific factors. 

Ind-Ra stated that the decline in tariffs is being driven by a lower capital cost/MW of around INR40million/MW due to advanced panel designs enabling a higher capacity utilization factor (CUF), a reduction in panel costs globally, and lower financing costs. Safeguard duty exemption on panel imports is another factor driving cost reduction, according to the rating agency.

Further, the bids exploit the solar potential of states such as Rajasthan and Gujarat, resulting in a higher plant load factor.


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