Bloomberg News

India Solar Cost Falls to New Low on Panel Prices, Competition

February 23, 2014

India’s solar power cost fell to a new low, edging closer to coal, as declining panel prices and increased competition drew offers to build plants from groups backed by BlackRock Inc. (BLK:US) and Electricite de France SA (EDF).

India, which uses competitive bidding to select companies offering to generate clean energy at the lowest cost, awarded 750 megawatts of permits on Feb. 21, half of that eligible to use imported equipment. The government also offered grants to offset project costs for the first time, helping attract bids for triple the capacity auctioned.

Winners of the import-eligible capacity, who bid seeking the least from the 18.75 billion rupees ($302 million) of subsidies, priced electricity from solar panels at an average 6,500 rupees a megawatt-hour, down 25 percent from a national tender two years ago, said Jasmeet Khurana, head of market intelligence at solar consultancy Bridge to India Energy Pvt.

India plans a sixfold increase in solar capacity drawing $11.7 billion of investment by 2017 to reduce blackouts as plunging panel prices help photovoltaic projects compete with coal- and gas-fired plants.

The average price of silicon solar modules has fallen more than 7 percent since June, according to data compiled by research company PV Insights.

Solar panel and cell makers are jostling for market share amid rising stakes after the U.S. lodged a complaint at the World Trade Organization this month, accusing India of imposing trade barriers on the auction.

BlackRock, World Bank

The Indian unit of St. Peters, Missouri-based SunEdison Inc. (SUNE:US), which counts BlackRock among its biggest investors (SUNE:US), and World Bank-backed Azure Power India Pvt. won the most capacity at 100 megawatts each, according to bidding results. ACME Solar Energy Ltd., 25 percent-owned by EDF’s renewable unit, picked up 80 megawatts.

Developers who didn’t make the cut included Goldman Sachs Group Inc. (GS:US)’s ReNew Power Ventures Pvt., Tempe, Arizona-based First Solar Inc. (FSLR:US), and Welspun Energy Ltd., India’s biggest photovoltaic developer, bidding results show.

Other winners included Infrastructure Leasing & Financial Services Ltd., France’s Solairedirect SA and the clean-energy unit of India’s Hero Group.

Developers planning to use more costly local panels and cells bid on average for nearly double the grant amounts compared with those expected to import equipment, raising the government’s subsidy burden by 3.5 billion rupees, Khurana said.

To contact the reporter on this story: Natalie Obiko Pearson in New Delhi at npearson7@bloomberg.net

To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net


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Companies Mentioned

  • BLK
    (BlackRock Inc)
    • $329.47 USD
    • 1.30
    • 0.39%
  • SUNE
    (SunEdison Inc)
    • $20.79 USD
    • 0.40
    • 1.92%
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