A total of 6.5 GW of solar projects are expected to be up for auction in the next three months, says Bridge to India. In addition to intense competition, it forecasts a sharp reduction in tariffs, particularly for the upcoming auctions in Rajasthan and Karnataka.

Following the unveiling of its ambitious 100 GW 2020 solar plans, the Indian Government is “walking the talk,” stated consultancy, Bridge to India. Overall, auction processes for more than 10 GW of solar have already been completed, with another 6.5 GW set to go up for auction in the next three months.

“This frenetic pace of activity is a big step-up in contrast to historic solar capacity addition of approximately 1 GW per annum over last three years,” it said, adding that despite the pipeline, prices are continuing to come down “sharply,” with developers, including ReNew, Reliance and Azure Power, considering tariffs below INR 5/kWh (around US$0.075).

Although criticism has been aimed at such low tariffs in the past, by both Bridge to India and consultancy, Mercom Capital, the former believes in this instance, they are not a problem due to lower solar park charges in these states, and a relatively positive risk profile for international developers – “no land acquisition or transmission connectivity risk combined with possibly the best India off-take risk in the form of NTPC,” it explains.

In the next two months, the National Thermal Power Corporation (NTPC) is set to hold two auctions in Rajasthan and Karnataka, totaling 420 MW and 600 MW, respectively. Here, Bridge to India expects “strong” competition, with tariffs potentially under INR 4.63/kWh (around US$0.0698).

In August, Madhya Pradesh began selling PV power at India’s lowest rate – INR 5.051/kWh ($0.08/kWh), besting the previous lowest price set in Telangana by SkyPower, which secured a winning bid of INR 5.17/kWh ($0.08/kWh).