The Solar Energy Corp. of India (SECI) has achieved a significant milestone by discovering a lowest tariff of ₹5.25 ($0.055)/kWh in its tender to procure 1 GW of firm and dispatchable renewable energy (FDRE) on a round-the-clock basis. According to pv-magazine.com, six developers emerged as the lowest bidders: Kengeri Prime Solar (180 MW), Resolven Four Energy (150 MW), Hexa Climate Solutions (150 MW), Hero Solar Energy (120 MW), EMIF II Holding (100 MW), and Purvah Green Power (70 MW). SECI awarded the remaining capacity to Juniper Green at ₹5.26/kWh, demonstrating the competitive nature of the renewable energy market.
The renewable energy ministry has introduced a significant policy change allowing renewable energy developers to voluntarily reduce tariffs after winning tenders. According to reports from Mint, the ministry of new and renewable energy (MNRE) issued a communication dated 31 July clarifying that renewable energy implementation agencies (REIAs), including Solar Energy Corp. of India Ltd, NTPC Ltd, SJVN Ltd, and NHPC Ltd, can accept lower tariffs offered by successful bidders. The policy states that developers can offer reduced prices on their own initiative, but REIAs and power buyers cannot negotiate for such reductions. As per TradingView News, the ministry received a representation seeking clarification on whether the earlier directive applied when a successful bidder itself offered to reduce the discovered tariff after completion of the bidding process.
This clarification could significantly impact India's renewable energy sector by helping clear approximately 40 GW of unsigned power purchase agreements (PPAs) without reopening original bids. As reported by Mint, the move comes as standalone renewable energy projects face a large backlog of unsigned PPAs, while distribution companies are signing expensive contracts to procure thermal power. India's non-fossil power generation capacity has reached 300 GW, led by solar power, highlighting the scale of the current backlog issue. According to TradingView News, the clarification could give REIAs a way to make stuck projects more acceptable to power distribution companies (discoms), potentially allowing PPAs to be signed without changing the terms or configuration of the original bids.
The new policy represents a shift from the ministry's earlier stance. According to Mint, in April, MNRE had advised REIAs to discourage post-tender negotiations with developers to modify discovered tariffs. The current communication cited the Central Electricity Regulatory Commission's (CERC) observation in 2022 that voluntary reduction in discovered tariff does not violate norms. The ministry clarified that successful bidders can voluntarily offer tariff reductions without being asked or pressured to do so, and such voluntary reductions may be accepted by concerned REIAs. As per TradingView News, the key distinction is who initiates negotiations for price cuts: the developer can do so, but the REIA or procurer cannot.
An official familiar with the developments told Mint that the provision could provide developers a mechanism to make projects viable if market tariffs fall after winning tenders. The policy allows developers to offer lower tariffs when subsequent tenders witness lower prices, enabling them to make some returns rather than leaving awarded capacity and land unutilized. According to TradingView News, a successful developer who finds that subsequent tenders are witnessing lower tariffs and finds it difficult to get buyers for the power from its project would have the option to offer lower tariff. The developers would at least make some returns, rather than sitting on the awarded capacity and the land unutilized, without any operation and making no money. Industry experts note that this approach maintains the original bid configuration while addressing market price variations, potentially making projects more acceptable to power distribution companies.
The clarification addresses the growing backlog of unsigned PPAs for plain-vanilla capacities, as reported by Mint. Jatin Arya, director and head–Energy and Infrastructure Ratings at CareEdge Ratings, explained that REIAs were attempting to clear backlog by altering bid modalities, including adding wind and storage systems. The ministry's decision to allow only tariff reductions while maintaining bid configuration eliminates the need for regulatory clearance and reduces the risk of legal challenges from other players. According to TradingView News, the Centre has been making efforts to reduce the backlog of unsigned PPAs and boost demand among power distribution companies. The ministry's April directive had also stated that SECI would be the sole REIA for future tenders, but this clarification provides flexibility for other REIAs to accept voluntary tariff reductions.
