India Government’s Mega Solar Offering Soars

NEW DELHI: The government’s latest offering of solar power projects based on indigenous kits attracted bids for twice the 1,000 MW capacity offered by state-run SECI (formerly Solar Energy Corporation of India) Ltd on Thursday, marking a revival in investor sentiment as a result of several progressive policy tweaks making domestic manufacturing a viable option.

This marks the first over-subscription of a renewable energy capsule in nearly two years during which auctions for solar and wind energy projects of over 10 GW had to be extended, postponed or retendered in the absence of response from investors.

Industry sources estimate the latest domestic manufacturing-linked capsule will lead to an investment of Rs 6,000 crore into setting up solar kit-making capacity, giving a major boost to prime minister Narendra Modi’s ‘Make in India’ campaign that appeared to be losing steam amid the country’s economic low. In the jobs front too, the capsule is estimated to create up to 10,000 permanent direct employment and 40,000 indirect employment.

Sources said Adani Green Energy Ltd led the bidders by offering to set up a capacity for manufacturing solar photo-voltaic gear for 1,000 MW and solar power project of 4,000 MW. Azure Power and Navyug each opted for a kit manufacturing capacity of 500 MW and 2,000 MW of power project. The final winners will be decided through a reverse auction shortly.

Several market players said the safeguard duty against cheap imports, largely made in China or Chinese companies in south-east asia that are hugely subsidised by Beijing, combined with several other measures enthused the bidders. India’s domestic solar cell manufacturing capacity currently stands at 3,300 MW and module-making capacity is 8,000 MW.

Projects that are offered with the condition that promoters have to set up domestic capacity enjoy a higher tariff ceiling of Rs 2.93 per unit against average Rs 2.60 for general projects. So the reverse auction starts from a higher level in the domestic manufacturing-linked projects. This gives promoters fiscal headroom as the general winning rate for solar power hovers around Rs 2.34 per unit. SECI also offers these projects PPAs (power purchase agreements) for four times the offered size.

Source: TOI

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