Government officials in state discuss scrapping the auction altogether over the substantial rise in tariff rates from the previous solar auctionBengaluru: The winning tariff rates set by SB Energy, SoftBank’s solar business, French energy group Engie and Finland-based Fortum, are much higher than expected, leading government officials to consider the possibility of scrapping the auction altogether. The 700-MW auction last month resulted in a big victory for foreign developers, with SB Energy attaining 250 MW at Rs 2.84 per unit price, and Fortum and Engie getting 250 MW and 200 MW, respectively, both at Rs 2.89 per unit.
In contrast to the previous solar auction in the state, which was held in September last year, the lowest tariff had been Rs 2.44 per unit. Gujarat Urja Vikas Nigam Ltd (GUVNL), which holds the auctions, earlier called off a 500 MW solar auction in March where the lowest tariff was Rs 2.98 per unit.
“We may not agree with the tariff. It seems to be on the higher side. A decision will soon be taken. We are looking at options. We were expecting a much lower rate,” a senior state government official said.
An increase of 40 paise on tariffs over a period of three months has, however, been received well by developers and analysts. “If the auction gets cancelled, the move could send wrong signals to the foreign investor community,” said a developer.
Various experts in the field say the rise in tariffs could be as a result of GUVNL setting a condition to have their solar projects at solar parks only, not like the condition for September’s auction, where the project could be located at any place.
PSU Watch is a business news brand of 27 Frames Communications LLP. It places the spotlight on PSUs, Governance, Bureaucracy, Defence and Public Policy as the sector traverses through a period of radical change.