Solar Energy in India
Reverse Auctions and Falling Tariffs
Competitive bidding drove solar tariffs from over ₹10 per unit to below ₹3, making solar competitive with coal.
Competition cut prices dramatically.
How auctions work
Developers bid to sell power at the lowest tariff, and the winner signs a long-term power purchase agreement.
Price falls
Tariffs fell from above ₹10 per kWh around 2011 to under ₹3 and even below ₹2.5 in some auctions.
Drivers
Cheaper modules, cheaper finance and scale.
Risks
Very low bids can lead to projects that are not built or renegotiations.
A winning bid
A developer wins a contract by offering the lowest tariff for 25 years.
Assuming the lowest bid always means the best outcome
Delivery risk matters.
Key takeaways
- Auctions set tariffs competitively.
- Prices fell sharply.
- Cost declines drove them.
- Very low bids carry risk.
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