Solar project auctions slow down in Q1 2022

Solar energy project auctions in the country have slowed down in the first quarter of this year as only 2.7 gigawatt (GW) of auctions happened, while tendering activity was initiated for over 5 GW.

Solar auctions were down by 37% when compared to the fourth quarter of 2021 and 66% down when compared to auctions held in the first quarter of 2021.

A 90% drop in tendering by the apex Solar Energy Corporation of India (SECI) due to slowdown in finalising Renewable Purchase Obligations (RPO) with state distribution companies and concern and lack of clarity on basic customs duties are some of the factors contributed to the decline in auctions, according to analysis by Mercom Research, a data analysis firm specialised in renewable power.

India is imposing a 40% duty on the import of solar modules to boost domestic manufacturing from April 1. Compared to the 3% share of auctions in Q1, the SECI had accounted for nearly 28% of auctions in Q4 of last year. SECI had auctioned 1200 MW in Q4 of last year.

India had added a record over 10 GW of solar capacity in 2021, a 210% increase compared to 3.2 GW installed in 2020. This was mainly due to Covid-19 delaying several projects in 2020 and project deadlines shifted to next year. However, solar tenders had dipped by 4.3% year on year and auctions had fell by 2.6% compared to 2020. India's installed renewable energy capacity had stood at 150.9 GW by the end of December 2021. The country targets to add another 350 MW before 2030, which demands over 40 MW addition every year. Sources say despite sluggish auctions in the first quarter, the outlook for the remaining quarters is bright as more auctions are going to happen.

In the first quarter of 2022, the National Thermal Power Corporation (NTPC) accounted for the majority of the auctions, about 35%, followed by the Maharashtra State Electricity Distribution Company (MSEDL) with 26%.