Developers and global investors snap up India's solar power tenders
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Key Findings
In the last four years, solar installations in India have grown more than five-fold, from a mere 6 gigawatt (GW) of capacity in 2016 to almost 35GW, achieving more than one-third of the country’s ambitious 2022 solar target of 100GW.
With another 23GW of projects in the pipeline and 30GW in the bidding phase, the sun is shining bright for India’s rising solar graph. These numbers, current as of March 31, are a testament to the response from solar developers and global capital providers who, despite some policy headwinds, are willing to invest in the sector despite some of the lowest real solar tariffs in the world.
Executive Summary
Solar tariffs in India have fallen continuously over the last few years. They only began to stabilize in 2019.
Since 2019, most of the newly-auctioned solar projects saw tariffs in the range of Rs2.50-2.87/kilowatt hour (kWh) (US$3.5-3.9 cents/kWh). Interestingly, seven of 10 tenders turned up winning tariffs below Rs2.55/kWh (US$3.54 cents/kWh), which were well below the ceiling. Most of these tenders were fully subscribed, even with such low tariffs. Out of 10 successful auctions, only two specific cases involved tenders that were undersubscribed by more than 60%.
Clearly, there has been no visible impact of ceiling tariffs on solar auctions in the last few months, but the Ministry of New and Renewable Energy (MNRE) removed ceiling tariffs in February 2020 for all new solar and wind tenders to hasten tender activity and capacity allocation.
