Indian Solar Auction Sees Foreign Developers Mostly Shut Out

  • Five Indian firms dominate 500 megawatts of solar auctions
  • Karnataka auction lowest bid was 4.78 rupees a kilowatt-hour

India’s latest offering of solar capacity saw just one foreign bidder among the winners, a reversal of previous auctions when outsiders dominated, winning the right to supply clean power at record-low rates deemed by domestic developers as unrealistic.

Of the local players, RattanIndia Power Ltd., Adani Enterprises Ltd., Tata Power Co., Acme Group and ReNew Power Ventures Pvt. won 400 megawatts of the 500 megawatts of capacity auctioned off Tuesday in the south Indian state of Karnataka, Tarun Kapoor, joint secretary at the ministry of new and renewable energy, said in a phone interview. Fortum OYJ of Finland was the sole foreign winner, securing 100 megawatts of capacity.

The lack of foreign winners is particularly notable in light of previous auctions when SunEdison Inc., the embattled renewable-energy company facing potential technical defaults on at least $1.4 billion of loans and credit facilities, was among the winners. Inching closer to bankruptcy, SunEdison is now seeking to sell as much as 1 gigawatt of unfinished projects in the Asian nation, according to people familiar with the matter.

For Tuesday’s auction, RattanIndia and ReNew Power won 50 megawatts of capacity each, with RattanIndia quoting the lowest tariff at 4.78 rupees a kilowatt-hour and ReNew Power offering the highest at 4.8 rupees, Kapoor said. The remaining four bidders secured 100 megawatts each at 4.79 rupees a kilowatt-hour, he said.

In November, SunEdison won all 500 megawatts of solar capacity offered through a government auction in the southern Indian state of Andhra Pradesh with a bid of 4.63 rupees a kilowatt-hour.

Winning Bids

Even with winners in the latest auction offering slightly higher tariffs, Indian developers say the successful bids are still too aggressive.

“This tariff is still 15 paise too low,” Sumant Sinha, the founder of ReNew Power, said by phone. “The ideal number should have been 4.95 rupees a kilowatt-hour.”

According to Prashant Panda, president for business development at Acme Group’s solar arm, the tariffs are becoming more realistic.

“Slowly and steadily they will rise,” he said.

The price paid for solar power in India touched a record low of 4.34 rupees a kilowatt-hour in auctions held in the state of Rajasthan, where a total of 420 megawatts of capacity was awarded in January.

“There was a realism in overseas firms’ bidding strategy, probably because they have their India business in place and also the SunEdison lesson," said Vinay Rustagi, managing director at Bridge to India, a solar research firm.

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