IEEFA India: A Momentous Solar Event

A matter of hours after we commented this week on a record low bid for solar project development in India, that record fell again.

The three winning bids for the 750MW auction, by Mahindra Renewables, Acme Solar, and Solenergi Power, came in at below Rs2.97-Rs2.979/kWh. Bidding opened at Rs3.59-3.64/kWh.

The results, for rights to develop the world’s biggest solar power park in the world’s second-most populous country, are momentous. They pave the way for truly epic solar development in India, where Prime Minister Narendra Modi—just two years in power—is intent on forging an electricity-sector transformation that may well serve as a core model for much of the rest of the world, emerging markets especially.

It’s an historic event, and it brings to mind what at the time was a record low bid a year ago by Fortum, the Finnish electricity company that won a 75MW project in India Rs4.34/kWh bid. That beat the previous record low by 25 percent.

Skeptics—and there were many—considered that event an aberration..

“It can’t be replicated,” went the conventional wisdom. “It’s not commercial, it’s not viable, it won’t be repeated.”

The bids this week, for a solar park at Rewa, have not only proven otherwise, they signal momentum toward the government’s new draft National Energy Plan, which calls for a fivefold expansion to 258GW of renewable capacity by 2027. That program would diminish thermal power’s share of electricity capacity to 43 percent from 66 percent today.

Tim Buckley is IEEFA’s director of energy finance studies, Australasia.

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