There was an auction in North India for the contract of building a huge solar farm which was remarkable. Around two dozen developers took part in the auction. The auction in may lasted for 30 hours.
The final result of the auction left everyone startling. The winning bid for the 500-megawatt Bhadla Solar Park in Rajasthan was one of the lowest prices in the whole world has ever seen. A guaranteed price of Rs2.44 was the tariff offered by two companies jointly –Acme Solar, an Indian developer, and SBG Cleantech. It was not a world record though as lower prices have been seen in Middle East and South America. But the result affirmed India’s place at the center of global renewables revolution.
India’s environmental records have always attracted headlines of a different kind. The government was once accused by numerous countries for undermining International climate change talks; New Delhi has become one of the World’s most polluted cities. But the Bhadla auction affirmed that India is undergoing major changes in order to transfer from fossil fuels to clean and renewable energy. Being the third carbon-emitting country, bringing in major expansion in the country’s renewables sector would prove a huge boost to the attempts of keeping global temperature normal.
This shift is being noticed by many big foreign investors and many of them are looking in India for high-yielding green infrastructure projects. India is yet at a good speed in comparison to other nations. Mr Masayoshi Son, founder of SoftBank plans to invest US$20 billion in the Indian solar power industry. Ministers in New Delhi reckon that US$160 billion will be required in capital overall for meeting their target in renewable energy.
But despite the ambitious targets, some of the industrialists are skeptical if such low tariffs could be actually made. They warn about the euphoria taking placing in the Indian solar developers has made them blind from the potential risks.The growing confidence in the solar sector around the world would take a heavy blow if Indian projects were to become financially distressed or even collapse.
Mr Sumant Sinha, chief executive of ReNew power, which bided but could not compete for the Bhadla tender, said: “There is no logic behind such low bids, companies are becoming desperate not to miss out.”As per an analysis done by Bridge to India, a consultancy focused on renewable power in the country, developers are expected to create 8.8 gigawatts of new solar capacity in 2017.Moreover, certain signs show that banks, who have granted loans to developers, are getting nervous about whether they will be repaid. One foreign banker has told us that they are not willing to finance Indian solar projects until the companies come up with the idea on how they are going to provide tariff at such low costs. “There are so many things that can go wrong here, but companies are not considering any room for errors,” said Mr Sinha. “If they don’t get it right, companies will go under, banks will suffer and the industry might just slow to a halt.”