India May Announce First National Solar Auction Since 2011 for 750 MW

India may announce this month an auction of licenses to build solar-power plants after a gap of almost two years, offering developers as much as 3 billion rupees ($48 million) of direct grants for the first time.

The Ministry of New and Renewable Energy is awaiting Cabinet approval to invite bids for 750 megawatts of solar photovoltaic capacity, Ministry Joint-Secretary Tarun Kapoor said in an interview in New Delhi. The auction, which may be announced in the next 10 days, is typically held about 45 days after bids are invited, he said.

“The bidding documents are all ready,” Kapoor said. “Cabinet approval is expected very soon.”

Companies including Leon Black’s Apollo Global Management LLC-backed Welspun Group and billionaire Vinod Khosla’s Sunborne Energy Holdings LLC have built 1,839 megawatts of solar capacity and cut average costs by about 51 percent since India began auctioning licenses through its National Solar Mission in 2010. The program seeks to reduce solar power’s cost to the level of other forms of grid-supplied electricity by 2017.

The ministry is seeking approval to disburse the grant, which will cover as much as 30 percent of project costs, Kapoor said. Previously, the government supported the solar industry by buying power at above-market rates.

The government is offering 25 million rupees per megawatt to projects that will range in capacity from 10 megawatts to 50 megawatts, according to auction guidelines released in May. Developers will submit bids specifying the amount of funds they are seeking, and those needing the least will win.

The ministry would also have to obtain approval from the election commission, should the Cabinet fail to clear the auction before state assembly elections are announced in New Delhi, Kapoor said. That may cause a few extra weeks of delay and bidding would be announced by December at the latest, he said.

Five states, including the national capital territory of New Delhi, will go to the polls by the end of the year, according to the National Election Commission of India.

Copyright 2013 Bloomberg

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