Gujarat’s 500 MW solar auction sees aggressive tariff of INR 2.20/kWh despite BCD impact


Gujarat Urja Vikas Nigam Limited’s 500 MW solar auction under Tranche XII secured the lowest winning bid of INR 2.20/kWh—about 11% more than the record-low INR 1.99/kWh seen in the previous 500 MW auction in December. NTPC (150 MW), Sprng Energy (120 MW), Coal India (100 MW), and Tata Power’s TP Saurya (60 MW) won an aggregate 430 MW at this tariff.

SJVN won the remaining 70 MW capacity at INR 2.21/kWh.

JMK Research terms the winning bid of INR 2.20 quite an aggressive quote considering that the auction was conducted after the announcement of basic customs duty levy of 40% on imported solar modules and 25% on solar cells, from April 1, 2022. 

JMK Research expects solar tariffs to rise 40-45 paisa/kWh rise due to 40% BCD. However, the GUVNL auction fetched the lowest winning bid of INR 2.2/kWh with the same conditions as in its December auction yielding INR 1.99/kWh tariff—despite the fact that developers were asked to consider the BCD factor on solar cells and modules before placing the bids as there will be no scope of availing pass through under “Change In law” provision.

JMK Research analysts attribute the comparatively lower tariffs to “good ratings of Gujarat State DISCOM, choice of project location for developers, and anticipation that mono PERC module prices would fall 10-15% to reach USc19-20/Wp (watt peak) by 2022 (excluding duties and taxes).”

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