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Bhadla Phase-III Solar Park : Key trends indicating how solar become cheaper than coal fired power plant with LCOE of Rs 2.44/kWh

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Bhadla Phase-III Solar Park : Key trends indicating how solar become cheaper than coal fired power plant with LCOE of Rs 2.44/kWh

L1 Bid of Rs.2.44/kWh LCOE of Bhadla Phase-III Solar Park Project on 12th May’2017 by ACME Solar.

Solar Power LCOE of Rs 2.44/KWh-

If we look at the last six years, the tariff has been on the downtrend with an unprecedented drop of almost 80% across the world thanks to the aggressive bidding by global players including SunEdison. The few of the recent trends of L1 bid and quoted solar tariff in India:-

On 12 May 2017, Solar Power tariff dropped to 2.44 per unit during an auction of 500 MW of Bhadla Solar Park phase III

On 10 May, Solar Power tariff dropped to Rs 2.62 per unit during an auction of Bhadla Solar Park phase IV

In April 2017, solar power tariffs had fallen to an all-time low of Rs 3.15 per unit quoted by Solairedirect during the auction of a 250 MW project at Kadapa in Andhra Pradesh.

In February 2017, lower capital expenditure and cheaper credit had pulled down solar tariff to a new low of Rs 2.97 per unit (a basic bid of Rs 2.97 a unit) for the first year in an auction conducted for 750 MW capacity in Rewa Solar Park in Madhya Pradesh. However, The lowest tariff quoted by Mahindra Renewables Pvt. Ltd, for a grid connected solar power project before that stood at Rs 3.30 per unit i.e. the levelised tariff (LCOE) for 750MW Rewa solar park in Madhya Pradesh has worked out to be at Rs 3.30 per unit.

In January 2016, solar power tariff had dropped to a new low, with Finland-based energy firm Fortum Finnsurya Energy quoting Rs 4.34 a unit to bag the mandate to set up a 70-MW solar plant under NTPC's Bhadla Solar Park tender.

In November 2015, the tariff had touched Rs 4.63 per unit following aggressive bidding by US-based SunEdison, the world's biggest developer of renewable energy power plants.

bhadla img2

On 10th May (i.e. On Wednesday), the lowest bidder for the solar park in Rajasthan had quoted Rs 2.62 per unit for Bhadla Solar Park phase IV and after two days, on Friday May 12th, ACME Solar Holdings quoted lowest solar tariff at Rs.2.44/kWh for 200 MW followed by Japan's SBG Cleantech One at Rs.2.45/kWh for remaining 300MW during an auction carried out by Solar Energy Corporation of India Limited (SECI) for 500 MW capacity in Bhadla Phase-III Solar Park, Rajasthan. The solar park is being set up by Saurya Urja Company of Rajasthan Ltd, a joint venture between Rajasthan and IL&FS Energy Development Company Ltd. Respectful players like Acme, SBG, Vinnet Mittals – Avada, Hero, Renew Power, Shapporji Palonji etc participated in the bid and it is really heartening and charismatic to see that LCOE of Rs. 2.44 per kWh is not only a finance game but a big game of technology as well.

The projects are likely to be completed in about 12-13 months.

The quoted tariff is fixed for 25 years with no escalation and the bidders have sought no VGF (viability gap funding) from the government.

The entire solar power will be consumed in Rajasthan, and power sale agreement with the state distribution companies is already tied up.

The developers are responsible to connect to the pooling sub-station of solar park. The developers will be paying solar park charges of Rs 45.2 lakh per megawatt towards land, connectivity (from pooling substation to state network) and other infrastructural facilities.

bhadla img3

Winning bids for the solar power plant of 500 MW of Bhadla Solar Park phase III, were reportedly made by Acme Solar Holdings Pvt. Ltd (200 MW out of 500 MW plants each) and Japan's SBG Cleantech One (300 MW out of 500 MW plants each) at Rs. 2.44 per kWh and Rs. 2.45 per kWh respectively. ACME Solar Holdings quoted lowest solar tariff at Rs.2.44/kWh for 200 MW followed by Japan's SBG Cleantech One at Rs.2.45/kWh winning remaining 300MW

This news was remarkably in the limelight and the main reason of getting the world's attention was that this level of LCOE happens to be lower or close to the APPC (average power purchase cost)

Nevertheless, the reduction of Rs. 0.18- 0.19 /kWh compared to past bids of Rs 2.62/KWh is impressive.

bhadla img4

In essence GOI Policy, CAPEX, Energy Yield, Leverage factor, Hedging Risk, OPEX are the few key cost drivers responsible for the drop of LCOE from Rs 4.63 / kWh in November 2015 to Rs 4.34 / kWh in January. 2016 again to Rs 3.3 / kWh in Feb. 2017 again to Rs 3.15 / kWh in April. 2017 again to Rs 2.62 / kWh in May10. 2017 and recently again to Rs. 2.44 / kWh in May12. 2017. (LCOE is a ratio puts all costs both fixed and variable in the numerator, and divides it by energy yield in the denominator. Both numerator and denominator involving financial "discounting" using Weighted Average Cost of Capital to bring costs and energy yields from the future to the present).

ujjwal

About Author: Ujjwal Kumar Gupta, MBA - XLRI; B.Tech - IIT; Sectorial experience - Infrastructure, Energy, EPC, OEM, Power, Mining, Construction, Steel

Author's Linkedin Profile: https://www.linkedin.com/in/ujjwal-kumar-gupta-178221101/ 

Article Link: http://bit.ly/2t31a3T

Disclaimer: The author contributed to this article in his personal capacity out of the passion of writing as a hobby and also by doing judicious utilization of available free time. The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views or the official policy or position of the any entity, institution and organization. Assumptions made within the analysis are not reflective of the position of any entity, institution and organization. The author disclaim any liability in connection with the use of this information. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information.

 

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