Solar industry gets its due with new order on competitive bidding

The recently announced new guidelines governing tariff-based competitive bidding for solar power procurement signify a promising advancement for the Indian solar power industry, as they seek to foster robust competition, transparency, and increased investment in solar power ventures. With the bidding process projected to span from 2024 to 2028, India anticipates installing 50 GW of solar power annually, a significant stride toward realizing the ambitious goal of achieving 500 GW of non-fossil-based electricity by 2030. The key points highlighted in the official announcement deserves mention here:

Reduced Power Purchase Costs: The new guidelines promote competitive bidding, which is expected to drive down solar power prices. This will benefit consumers by leading to lower electricity prices. Power purchase cost constitute the largest cost elements for distribution licenses. Procurement of electricity through competitive bidding by the distribution licenses is expected to reduce the overall cost of procurement of power and facilitate development of power markets.

Framework for Solar PV Capacity Addition: The guidelines provide a clear and transparent framework for procuring solar power, making it easier for developers to invest in solar power projects. This is likely to lead to the development of more solar PV projects in India.

Risk-Sharing Framework: To provide a transparent, fair, standardized procurement framework based on open competitive bidding with appropriate risk sharing between various stakeholders to enable procurement of power at competitive prices in consumer interest , improve bankability of projects and ensure reasonable returns to the investors.

Fulfilling RPO/ESO Requirements: To facilitate solar PV capacity addition and fulfillment of Renewable Purchase Obligation (RPO)/ Energy Storage Obligation requirement of DISCOMS. The guidelines allow for the procurement of solar power from both grid-connected and off-grid solar PV projects.

Support for Government’s Commitment: Commending the Ministry of Power for issuing these guidelines emphasizes the government’s commitment to promoting the development of the solar power sector in India.

Global Leadership in Solar Power: The new guidelines are seen as a significant step towards making India a global leader in the solar power sector.

All the above policy points effectively underscore the advantages and significance of the recently introduced guidelines in the Indian solar power sector. It accentuates the prospects of heightened competition, lowered costs, augmented capacity, and the accomplishment of renewable energy commitments. Furthermore, it recognizes the pivotal role of the government in propelling the expansion of renewable energy within the nation.

We express our gratitude to the Ministry of Power, Government of India, for providing a comprehensive overview of the in the country.