Solar power sector sees revival in Feb after downturn due to duties

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Solar panels over a canal

Solar auction activities garnered speed in February after a disappointing performance in January, according to Mercom India, an agency that tracks the solar power sector in India.

About 2.7 GW of solar power was auctioned in February, which is 800 MW more than what was auctioned in the same month last year, the firm said.

Solar power activity in India is carried out via two modes in India — tenders and auctions.

In the tender mode, developers bid for the right to create a solar farm for a particular budget. In auctions, on the other hand, they bid for the right to supply power to a distribution company from their own farms at a particular rate for a particular period of time, usually 25 years.

While the project is owned by the developer in the auction-based process, the developer’s role is restricted to construction and maintenance in case of tender-based projects.

Auctions are usually carried out by state power distribution companies or Solar Energy Corporation of India, the central government’s renewable power agency.

AUCTIONS

In February, solar auctions saw a marked increase from the 135 MW of solar power auctioned in January.

Shiv Solar and Acme Solar won 500 MW and 300 MW respectively at their lowest winning tariff of Rs 2.74 per unit, while ReNew Power and Avaada Energy won 300 MW and 350 MW at Rs 2.75 per unit.

The February number is on the stronger side, given that only 2 GW was auctioned in December, 60 MW in November, and 759 MW in October.

MAJOR TENDERS IN FEBRUARY

Tender announcements witnessed a slight decline this month.

According to Mercom’s India Solar Tender Tracker, about 4 GW of solar capacity was tendered in February, down from 6 GW in January.

It was also considerably less than the 13 GW of projects tendered in December. November had seen 1.4 GW of solar energy projects tendered in India, according to Mercom.

The dip in November figures are attributed to the imposition of safeguard duty on the import of solar cells from China and Malaysia in July last year.

However, after initially postponing big projects due to the ban, developers seem to have found alternative sources for cheap solar equipment.

While solar imports from China halved from a year earlier in April-November 2018, shipments from Vietnam rose five fold and those from Thailand jumped 26 times.

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