India’s solar power tariffs was able to hit a historic low of 2 per unit during an auction by state-owned (SECI), Solar Energy Corporation of India Ltd, a state official aware of the progress said. The country’s historically lowest reported solar tariff was ₹2.36 per unit. Sembcorp’s India subsidiary, Green Infra Wind Energy Ltd., headquartered in Saudi Arabia, Aljomaih Energy, as well as Water Company, and Singapore, to win contracts for the building of 200 MW as well as 400 MW solar plants, the winning bids were set at ₹2 per kilowatt-hour (kWh), respectively. State-run NTPC Ltd put the second-lowest winning bid of Rs2.01 per unit to secure the balance power of 470 MW.

A government official who sought anonymity said that the new record bid of ₹2 for every unit was discovered during the auction. Aljomaih Energy and Water Company spokespersons were unable to be reached directly. On the growth, spokespersons for Sembcorp Industries as well as NTPC did not comment. Interestingly, during these auctions done by India, it is the global players who have recently taken the lead in putting aggressive bids. Solarpack Corporación Tecnológica, S.A. from Spain was able to set the lowest bid, during the last round. In May 2017, the previously reported low solar bid was approximately 2.44 per unit.

The tenders are for fund-starved government electricity distribution firms (discoms) who are not ready to ink contracts with indirect suppliers including SECI for such already awarded schemes at a relatively higher cost. The discounts are tariff-shopping due to the latest low-price bids and are hesitant to sign any power supply agreements for such kind of programs. Debt support for renewable energy ventures is also drying up, with major Indian banks refusing to fund projects dedicated to selling electricity at less than ₹3 per unit. The banks have been skeptical of financing developers because they doubt the viability of companies that have promised to sell electricity at rock-bottom tariffs.

This bid is also relevant, given India’s rapid speed of adding clean energy power. More than a quarter of India’s installed power generating capacity is now accounted for by renewable energy ventures. India has 34.6 GW of solar electricity, to provide a solar capacity of 100 GW by 2022. The nation targets about $80 billion in additional renewable energy investment by 2022, raising over threefold to $250 billion in 2023-30. The bids also expose the pivot of the NTPC towards renewable energies. 

Provided that India’s energy environment is increasingly changing, the state-run traditional power generation company rewrites its playbook. For its part, NTPC has agreed not to set up new greenfield coal-fired power plants and plans to make an overall Rs1 trillion capital investment. This will be from 2019 to 2024 which will enable it to become a 130 GW power manufacturer by 2032. It has a renewable capacity of about 4GW, mainly thermal, with plans to install at least 5GW of solar capacity in two years. As part of its plan to have a 32GW renewable portfolio of energy by 2032, it would accumulate a minimum of 1GW of the operating solar plants. 

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