Tata Power and AlJomaih of Saudi Arabia are the low bids for MP solar installations

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The least bidders for three solar installations totaling 500 megawatts at the Neemuch Solar Park in Madhya Pradesh were Tata Power NSE 1.62 percent and Saudi Arabia’s AlJomaih Energy & Water Company. The industry has been taken aback by the low tariffs offered by bidders for electricity delivery from the projects.

TP Saurya, a Tata Power company, quoted $2.14 per unit for a 170 MW project and $2.149 per unit for a second project. TP Saurya, a Tata Power subsidiary, quoted ₹2.14 per unit for building 170 MW of capacity and ₹2.149 a unit for another 160 MW in Rewa Ultra Mega Solar Ltd.’s (RUMSL) auction, people in the know said. Aljomaih won 170 MW quoting ₹2.15 per unit.

Industry experts said the ₹2.14 per unit tariff was a surprisingly steep decline from a ₹2.33 per unit winning bid by NTPC NSE 1.07 % in RUMSL’s previous auction. Solar prices are likely to grow from a record low of ₹ 1.99 per unit last year, as the basic customs duty and authorized list of modules and producers will shortly be implemented.

While a basic customs tariff of 25% on solar cells and 40% on solar modules will go into force in April 2022, the approved list, which will only include locally manufactured raw materials, is scheduled to go into effect next month. These two factors are projected to drive up project costs, as Indian developers will have to pay more to import solar equipment.