Solar Tariff SECI 500MW Bid

The Truth Behind 3 Rs per unit Solar Tariff

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Dramatically low solar tariffs have been creating the stir in news since the Solar Energy Corporation of India (SECI) released it’s bid results in late November. Agencies have been reporting that Solar Power tariffs touched a record low of Rs. 3/unit. While this sounds like great news, it is only the partial truth. Here is the complete understanding of solar power tariffs discovered as part of SECI’s 500 MW tender.

1. Mechanism for Solar Tariff Discovery:

SECI, as part of it’s mandate from the Ministry of New & Renewable Energy, released a tender, inviting solar energy companies to bid for solar projects under CAPEX and RESCO models. The lowest bidders would be allocated capacities for which they would be able to avail central financial assistance or subsidies. Key features of the price discovery mechanism:

1.1 State-wise bidding for Solar Capacities

Participants had to bid separately for each of the states, i.e. they could bid a different tariff for Maharashtra versus Sikkim. The subsidy available for 30% for General Category states and 70% of the benchmark capital amount for Special category states.

1.2 Levelized Tariffs

For calculating bid tariff a weighted average of tariff over 25 years has been considered which includes a discount factor of 11% year on year. Thus it is possible for the Solar Developer to charge a tariff higher than the bid tariff in any of the years.

1.3 Applicability to Solar for Not for Profit Entities Only

The tender invited bids for solar to be installed at non-commercial entities such as schools, colleges and hospitals for which subsidies are available. Thus these tariffs do not apply to solar to be installed at say, factories.

2. State-wise Tariff Discovery

The chart below shows the average solar tariff bids for each of the states along with standard deviations. The green markers denote special category states for which the government is providing 70% subsidy for a limited time. So Delhi, for example, received an average bid of Rs. 5.31/kWh with a standard deviation of 0.53.

Solar Tariff SECI 500MW Bid
State-wise solar power tariffs discovered as part of SECI’s 500 MW Tender

On study of the solar tariffs, it is obvious that except for Himachal Pradesh, Puducherry and Uttarakhand, the solar tariffs discovered range from Rs. 4.9- 6.52/unit.

For the rest:

  • Rs. 3/unit in Himachal Pradesh is applicable for 1 MW capacity.
  • Rs. 3.2/unit in Uttarakhand is applicable for 0.5MW capacity.
  • Rs. 3.3/ unit in Puducherry is applicable for 0.5MW capacity.

Thus the complete truth for lowest discovered tariffs is as follows:

  • Rs. 3-3.3/unit was discovered for three states only, which fall under special category and have 70% subsudy support
  • Applicable to limited capacities from 0.5-1 MW
  • Tariffs are levelized over 25 years
  • Applicable to non-profit entities only

In summary, while it’s great news that in some special cases solar tariffs have reached a record of Rs. 3/unit, it is important to note that it is not a catch all situation. For roof top solar, without subidy, tariffs ranging from Rs. 4.9- 7.5/ kWh are more realistic and consumers should set their expectations accordingly. Even at these tariffs, roof-top solar is now below typical grid tariffs and a cheaper source of electricity for all.

Recently, we had also done an analysis on the CAPEX results of the 500 MW SECI tender, have a look here.


Kanika Khanna

Kanika is passionate about data and technology- and writes about how they apply to roof-top solar.

4 thoughts on “The Truth Behind 3 Rs per unit Solar Tariff

  1. Really well explained, Kanika! It’s also a bit confusing to see that the government has revised the target for the Solar Mission to 100,000 MW – do you think there’s much activity towards achieving this?

    1. Thanks for your message Aakriti. Yes there is quite a lot of activity happening towards the 100 GW target, with 40GW assigned to the roof-top segment. Industry metrics though predict that we will achieve 12+ GW for roof-top segment as opposed to the 40 GW target. Additionally there are over 34 solar parks in various stages of progress in the utility sector.

  2. Hey Kanika,

    These data points are great. However, these are applicable for utility-scale. What is the true tariff of residential solar PV (under 10 KW)? Do you think its economical for common man to install rooftop solar panel?

    1. Hi Harshit,
      These data points are for roof-top solar (not for utility scale). Typically they would apply to systems above 50 kWp. Under 10 kW the tariff would work out to 0.5-1 Rs./Wp higher which is still cheaper than DISCOM electricity in cities such as Delhi, Mumbai, Pune, Jaipur etc. So yes, I would say that it is economical for anyone who is paying more than 8 Rs./unit to install solar.
      For more inputs and further queries, feel free to reach our at info[at]sunkalp[dot]com

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