The tariff for grid-connected solar power continued to plummet as the latest bidding under the National Solar Mission (NSM) received the lowest ever price of Rs 4.34/unit, beating the previous low of Rs 4.64/unit discovered in November last year, according to the results declared on Tuesday.
The bidding was conducted by the state-run NTPC for 420 MW capacity, in blocks of 70 MW, to be established at the Bhadla solar park in Rajasthan. The thermal power generator will procure and bundle solar power from these parks with coal-based power generated from its older plants to keep the resultant tariff low.
Fortum Finnsurya Energy bagged 70 MW at the lowest tariff of Rs 4.34/unit. Rising Sun Energy and Solairedirect Energy India managed to grab 140 MW each at Rs 4.35/unit. Yarrow Infrastruture, a subsidiary of RattanIndia Solar, won the remaining 70 MW on offer at Rs 4.36/unit.
Sanjay Aggarwal, managing directorof Fortum India said the company hopes to sign the power purchase agreement with NTPC within 30 days.
Analysts said the presence of a strong counter-party such as NTPC acted as a trigger for plunging solar tariff. Additionally, the plug and play model of solar parks with ready availability of land and transmission network for evacuation of power mitigates risk for developers.
In a bid to promote solar power to achieve a target of 100 gigawatt of grid-connected solar capacity, the Cabinet, last year, had mandated NTPC to bundle 3,000 MW of solar power with thermal power. The firm has already bid out nearly half of the capacity in the Andhra Pradesh and Rajasthan.
Analysts also said while solar power produced in Andhra Pradesh is likely to be consumed within the state, the same in Rajasthan may have to be exported to neighbouring states as the source state already has the highest installed capacity of solar power in the country. This may lead to a higher cost for NTPC as transmission charges will higher.