Maharashtra’s 1,350 MW solar auction receives poor response and a single bid of 5 MW

Lightsource BP's 60 MW PV plant in Maharashtra.

Indian Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) had floated 30 district wise tenders in August 2019, to procure 1,350 MW of solar power in 30 circles with project sizes ranging from 25 MW to 50 MW. According to Mercom Capital Group, for one of the districts, Baramati, a bid was received for 5 MW, and Kiran Renewables was found to be technically qualified. The tariff ceiling for this tender was set at INR 3.14 ($0.044) per kWh.
Considering the recent developments, the state commission observed that MSEDCL might review its bidding conditions to encourage more participation in the bids under the Mukhyamantri Saur Krishi Vahini Yojana solar programme. According to the consultancy, »the failure of auctions under the Mukhyamantri Saur Krishi Vahini Yojana is primarily due to low tariff caps.« In a true reverse auction, the developers will bid at a tariff that they think is viable. With most government agencies adopting tariff caps, the developers are forced to bid at prices set by government agencies who have no clue what the ground realities are. In other cases, government agencies have refused to approve the tariffs if they think it is high even though it was determined through a reverse auction. »Unless the reverse auctions are conducted where the bidders determine the price based on market conditions auctions will continue to fail,« says Mercom.

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