Adani Wins $6-Billion Solar Tender As India’s Renewables Push Gathers Steam

India handed a $6-billion solar tender to billionaire Gautam Adani’s group among contracts awarded to three firms as auctions gather momentum despite concerns about demand and costs.

Adani Green Energy Ltd. won the bid from state-run Solar Energy Corporation of India Ltd. for 8 gigawatt of solar power and 2 GW of panel manufacturing, according to exchange filings by companies. The government also awarded contracts to Azure Power Global Ltd. and ReNew Power Pvt. Ltd.

While Adani Green Energy, Adani Solar and Azure Power quoted Rs 2.92 a unit, ReNew Power bid Rs 2.9 a unit.

India’s shift to competitive bidding had driven solar tariffs to a record low of about Rs 2.42 a unit. While power producers said these could make projects unviable, states threatened to renegotiate earlier higher-priced contracts. That slowed down awarding activity even as the nation set aggressive renewable energy target. The latest tender, which includes both power generation and solar cell manufacturing, was extended multiple times before final auctions. Tendering and bidding, however, gathered steam this year.

Adani Green Energy’s winning bid is a heartening addition of renewable energy to the grid and promotes manufacturing of solar cells in India, Sambitosh Mohapatra, partner-power and utilities at PwC India, told BloombergQuint. “However, issue remains on the muted demand and overcapacity in generation leading to stranded costs and its impact on utility finances and consumer tariffs.”

The auctions went through even as the lockdown to contain Covid-19 hurt demand. According to the Central Electricity Authority, power consumption is recovering as the government eases curbs.

Adani Group’s Bid

The Rs 45,000-crore tender—the world’s biggest—will see Adani Green develop 8 GW of solar projects, while Adani Solar committed to establish 2 GW of solar cell and module manufacturing capacity, according to the company’s filing.

India’s domestic solar cell and module capacity, according to SECI, currently stands at 3.3 GW and 8 GW, respectively.

The investment will displace 900 million tonnes of carbon dioxide during its lifetime, Adani Green said. The company, the statement said, will invest Rs 1.12 lakh crore in renewable energy in the next five years to increase its capacity by 10 GW to 25 GW by 2025.

Adani Green Energy has surged 88% so far this year even as the BSE Power Index has fallen 19%.

According to Rupesh Sankhe, vice president, research power and renewables at Elara Capital, lower tariffs, power purchase agreement renegotiation, anti-dumping duties, financing unavailability can be issue for small players. But larger companies like Adani Green continue to dominate the market and gain market share, he said.

Other Successful Bids

Azure Power won the contract to set up at a 4 GW solar power plant along with 1 GW solar kit-making capacity, according to SECI.

ReNew Power won a 0.4 GW contract for round-the-clock renewable energy supply. This mandates very high capacity utilisation and is a first step towards ensuring near-firm, assured power supply using 100% green energy, Chairman Sumant Sinha said. The tariff discovered in this auction makes renewables cheaper than thermal power, making it the most commercially viable option for future power projects, he said, adding that the profile of power supply will be much more suitable for distribution utilities.

ReNew Power has an operational capacity of 5.44 GW and another 3.21 GW in pipeline.