The Indian Government’s endeavor to encourage domestic manufacturing of solar modules and cells led to the imposition of BCD (Basic Customs Duty) on solar modules with HSN Code 85414012 BCD (40% BCD), and solar cells with HSN Code 85414011 (25% BCD), from April 1, 2022.
With the new order in, there is an expectation that project costs will skyrocket.
In January 2021, the Gujarat Urja Vikas Nigam Limited (GUVNL) had floated a request for selection (RfS) to purchase power from 500 MW of grid-connected solar photovoltaic (PV) projects to be set up in the state in Phase XII.
The tender had received a good response and was oversubscribed. Despite being the first auction after the BCD announcement, there was no significant increase in the quoted tariffs.
Sprng Ujjvala Energy, NTPC Renewable Energy, Coal India, and TP Saurya, a Tata Power subsidiary, were declared winners in the auction to purchase power from 500 MW grid-connected solar projects.
Sprng Ujjvala Energy won a capacity of 120 MW quoting ₹2.20 (~$0.030)/kWh. NTPC Renewable Energy, Coal India, and TP Saurya won 150 MW, 100 MW, and 60 MW, respectively, quoting ₹2.20 (~$0.030)/kWh. SJVN had quoted ₹2.21 (~$0.030)/kWh for 100 MW but won 70 MW capacity under the bucket filling method.
Since this was the first auction after the announcement of BCD, bidders were forewarned to take the duty into account while quoting tariffs in all future bids where the last date of bid submission fell after the notification dated March 9, 2021.
The lowest quoted tariff was up just 11% compared to GUVNL’s previous auction for 500 MW of solar projects, which set a new record for the lowest tariff with ₹1.99 (~$0.0270)/kWh in the auction.