India has formally put out its 1.5 GW auction which has to use Indian manufactured solar modules – but has only managed to bypass WTO rules by insisting that all the energy must be used by companies owned by the central government. Developers were told by the Solar Energy Corporation of India (SECI) that they can bid for as much or as little as they want from 1 MW to 1.5 GW.
That final provision is perhaps because of the continual failure of Indian solar auctions to attract sufficient bidders to fill out each auction. Last week we reported on one auction from the National Thermal Power Corporation (NTPC) which attracted zero bidders for 1.2 GW of solar energy although there were special reasons for its failure.
The only other use of the energy other than for Indian government customers, is that bidders can use the power generated for self-consumption – nothing can be sold to a non-government entity.
This auction does not make the same mistake that the NTPC did, which was to specify areas close to its existing grid connections. Instead bidders can set the solar panels up at any location across the country and they can be land-based, floating, canal-top or rooftop systems. Bidders can also ask the government for viability gap funding, which offers support for capital cost expenditure up to $0.1 million per megawatt ($100,000 per MW).
This is the third such tender issued under the central public sector undertaking (CPSU) scheme. Following an unfavorable ruling at the World Trade Organization (WTO) regarding its domestic content program, India set up a separate scheme aimed at government-owned entities. The total capacity addition planned under this scheme is 12 gigawatts by March 2023. With this latest tender the total capacity offered for auction has reached 4.5 gigawatts.
The first two tenders got short shrift from project developers the first 2 GW scheme finding just five bidders for some 1,068 MW, just over half of the capacity, and the second for 1 GW, which has had its bid deadline extended twice, likely due to not enough bidders coming forwards. So we should expect this to happen once again.