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Tariffs Fell in NTPC 750 MW Solar Auction

16 May 2018

Tariffs fell to Rs 2.72-2.73/ unit in the 750 MW auction conducted by NTPC for projects at Ananthapuram Solar Park in AP, sizeable drop from previous auctions. But they were still well above record-low solar price of Rs 2.44/ unit reached at an auction held in May’17. Winners, each of whom got 250 MW, were Sprng Energy, the RE platform of UK-headquartered pvt. equity firm Actis LLP; Ayana Renewable Power, backed by the UK govt.’s development finance institution CDC; & SB Energy Solar, the JV of Japan’s SoftBank, Taiwan’s Foxconn & Bharti Airtel. While Sprng Energy sought a tariff of Rs 2.72/ unit, Ayana & SB Energy both quoted Rs 2.73/ unit. Sprng Energy is developing around 750 MW of RE projects in India. Its backer Actis LLP also financed Ostro Energy, which built a renewable portfolio of around 1100 MW, was recently bought by ReNew Power for Rs 10,800 Cr. biggest deal in the sector so far. SB Energy has 350 MW of commissioned solar power in AP & is developing 400 MW in Rajasthan. However, this is Ayana Renewable Power’s 1st venture in India. CDC has backed other RE businesses in India such Green Infra, but had been looking to set up its own renewables platform in the country for some time. NTPC auction saw a total of 11 bidders who b/w them sought 4000 MW. Response & fall in tariffs was a welcome change from recent auctions, where tariffs remained fairly high & developers’ attitude, lukewarm. At Gujarat auction of 500 MW in end-Mar, bids were in the range of Rs 2.98-3.06/ unit. Unhappy with relatively high tariff, Gujarat govt. cancelled auction soon after. Similarly, auctions conducted by Karnataka in Feb saw tariffs of Rs 2.94-2.97/ unit in the first & Rs 2.91-2.93/ unit in the second. Second auction, for 1,200 MW at Pavagada Solar Park, also undersubscribed. 1,000 MW solar auction by Maharashtra has been postponed 4 times because there were not enough subscribers. NTPC’s relative success is attributed to its excellent financials & reputation for guaranteeing off-take & timely payments, unlike many state utilities.

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