Companies led by SoftBank Group Corp. of Japan and Taiwan’s Foxconn Technology Co. Ltd. are bringing India some of the cheapest solar power in the world, helping Prime Minister Narendra Modi reach his ambitious clean-energy goals.
In two auctions this week for renewable-energy power-purchase contracts, bids from companies to supply clean electricity slid to as little as 3.8 cents a kilowatt-hour. The record is sharply below the previous bids around 5 cents and within striking distance of the lowest recorded bids in the United Arab Emirates and Chile as of quarter three of 2016, according to Bloomberg New Energy Finance.
India is already among the most competitive generators of solar power after establishing auctions for capacity that drew capital both from western utilities and from development banks anxious to help Modi clean up his country’s notorious smog. Each new auction over the past two years has helped India’s renewable-energy generators close the gap with the lowest cost fuels such as natural gas and coal, said Shantanu Jaiswal, an analyst for BNEF in New Delhi.
“The low bids leave very little cushion for absorbing any unforeseen expenses, and thus pose a risk for investors and lenders,” Jaiswal said, adding that several new power producers have successfully underbid incumbents to gain entry into India’s rapidly expanding solar market.
In a contest to win contracts for 500 megawatts of solar capacity through a competitive tender, India’s Acme Group quoted 2.44 rupees (3.8 cents) a unit to win 200 megawatts. SBG Cleantech Ltd. — the clean-energy joint venture between Japan’s SoftBank Group Corp., India’s Bharti Enterprises Pvt. and Taiwan’s Foxconn Technology Group — quoted 2.45 rupees to scoop up the remaining capacity, said Sanjay Sharma, general manager at the Solar Energy Corp. of India, the government agency for renewable targets in India.
The projects will be built in the sunny state of Rajasthan in the Bhadla solar park.
India is among a growing list of countries stretching from Asia to Europe and South America that have used auctions to make clean energy more affordable. Modi’s government has an ambitious plan to install 175 gigawatts of renewable capacity by 2022 to meet the fast-growing country’s electricity needs and to curb pollution.