Gujarat cancels solar auction that was swept by foreign players

Bengaluru: Citing the high solar tariff of Rs 2.84 per unit, the Gujarat government has called off its 700 MW auction held in December. Foreign players won the full 700 MW capacity that was up for auction, with SB Energy, SoftBank's solar business getting 250 MW at Rs 2.84 per unit, French energy group Engie and Finland-based Fortum getting 200 MW and 250 MW respectively, at the price of Rs 2.89 per unit.

The decision was relayed to the winning developers at a meeting attended by Raj Gopal, Gujarat's additional chief secretary in the energy department and Gujarat Urja Vikas Nigam Ltd (GUVNL) officials. GUVNL, which conducts the auction, also cancelled a 500 MW solar auction in March where the lowest tariff was Rs 2.98 per unit.

"We had conveyed to GUVNL that we were not comfortable with the tariff," a top Gujarat government official said. A GUVNL source, however, remained non-committal. "The tariff is high but a decision is awaited," he said.

High tariffs not received well

The previous auction for 500 MW held by GUVNL in September had seen the lowest tariff at Rs 2.44 per unit. The increase of 40 paise on tariffs has, however, not been received well by developers and officials.

Why the high tariffs?

Developers say the rise in tariffs could be because of GUVNL's condition to have their solar projects at solar parks only, not like September's auction, however, where the project could be located at any place.