India Revises Solar Auction Plans

The Indian government has been forced to cancel 12 gigawatts of solar power auctions due to a sharp decline in solar power tariff bids. This may seem counter-intuitive, but this capacity was to be supplied along with thermal power from coal-based power plants. The Indian government announced in the Parliament that it shall not go ahead with the auction of 12 of the 15 gigawatts solar power capacity for which the country’s largest power generation company NTPC Limited was chosen as the implementing agency. NTPC has already auctioned 3 gigawatts capacity under this ‘bundling’ scheme, and of this, 2.75 gigawatts capacity is operational while 250 megawatts capacity is under construction. The premise of this ‘bundling’ scheme was that power generated from solar power plants will be bundled with power generated from coal-based power plants, owned by NTPC Limited. This scheme was devised when solar power tariffs were much higher than the cost of generation of coal-based power plants. Bundling solar power with thermal power, in different proportions, thus resulted in a lower overall procurement cost for power distribution utilities. This scheme was implemented by the government in order to make solar power attractive for buyers which saw renewable energy as a costly source of power which was being forced onto them.