Though this is higher than the all-time low rate of Rs 2.44/unit, it is much lower than Rs 2.71/unit in the last auction during October, 2019.

The latest reverse auction for 1,200 MW of solar capacity, conducted by the Solar Energy Corporation of India (SECI), will see the tariff drop to Rs 2.5 per unit. Though this is higher than the all-time low rate of Rs 2.44/unit, it is much lower than Rs 2.71/unit in the last auction during October, 2019.

According to sources, SoftBank Group’s SB Energy, Canadian energy firm AMP Energy’s India unit and New York-based Eden Renewables’ Indian arm have been awarded 600 MW, 100 MW and 250 MW, respectively, all at Rs 2.50/unit. ReNew Power, the country’s largest renewable energy generator, was awarded 200 MW at Rs 2.51/unit.

Industry players have attributed the low rates to the relaxed norms incorporated in the latest SECI tender which safeguards developers against a number of uncertainties. When states seek approval of the tariffs before procuring power from such projects, electricity regulators often delay the ratification process. The tender allows extension of the scheduled commissioning dates of solar projects if tariffs are not approved by regulators within three months. Also, in case module prices rise due to changes in customs and other duties, tariffs will be increased by Rs 0.5/unit for every Rs 1 lakh of additional cost stemming from higher levies.

The country has set a target to raise the capacity of installed renewable energy generation plants from the current level of 86.3 GW to 175 GW by the end of 2022.

Most of the additional capacity is seen to come from utility scale solar plants. The current solar capacity is more than 34 GW and out of this, about 5 GW projects have been commissioned under SECI tenders since FY15. Another 4 GW of SECI solar projects are under various stages of construction. Karnataka, at 7.28 GW, currently has the largest installed solar capacity, followed by Rajasthan (4.84 GW), Tamil Nadu (3.79 GW), Telangana (3.62 GW) and Andhra Pradesh (3.56 GW).