Last week India finally held its national solar auction, the first in two years, seen as the least risky of several national and state-level solar auctions held over the past few years.
Demand was as heated as expected: 58 bids were received pledging to develop more than 2.1 GW of solar energy capacity, nearly triple the 750-MW that state-run Solar Energy Corp. of India (SECI) was offering. Here’s the full list of eager developers, which includes Azure Power India (200 MW), Welspun Energy (160 MW), Goldman Sachs-backed local developer ReNew Solar Power (50 MW), First Solar (30 MW), and a handful of state-run utilities. Part of the spur behind the activity was the government’s promises to cover as much as 30 percent of project costs; part of the delay was the adjustment of payout period from one year to five years. And perhaps part of the huge interest was the delay of the auction to help clarify some of its structure and sooth investor and developer concerns.
More than half of the bids (36 bids for 700 MW) proposed to take advantage of the domestic content requirement (DCR), more than double what SECI expected. Developers appear to be hedging reliance upon domestic suppliers’ ability to support projects by de-emphasizing those requirements in favor of Viability Gap Funding (VGF), points out Bridge to India’s Jasmeet Khurana.
Another positive takeaway is that more than half (60 percent) of the bids in terms of capacity would end up being managed as an independent power producer (IPP), a big increase in their level of participation. Pure-play solar IPPs don’t enjoy some advantages of tax incentives such as accelerated depreciation, but separating such tariffs is giving pure-play IPPs a more level playing field, he added.