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NEW DELHI: When solar power tariff dropped to Rs 2.44 per unit for the first time in May 2017, it set a record for cheapest electricity, busted the myth of renewable power being unaffordable and opened a Pandora’s box for conventional power plants by challenging coal’s dominance as the primary source of energy.

In an eerie feeling of deja-vu some 20 months on, the latest auction of storage-based solar project with assured peak-hour supply may have driven another nail into the coffin for coal by setting a world record for cheapest solar storage power — with the added commitment of almost round-the-clock supply costing 8% less than thermal power to break the affordability barrier for storage-based energy solutions. In the latest instance, Hyderabad-based GreenKo won 900MW of the 1,200MW solar storage project auction by SECI Ltd.

In the latest instance, Hyderabad-based GreenKo won 900MW of the 1,200MW solar storage project auction by SECI Ltd, the entity under the renewable energy ministry implementing the Modi government’s solar 175 GW renewable capacity plan. Goldman Sachs-funded ReNew Power bagged 300 MW.

GreenKo quoted a peak tariff of Rs 6.12 per unit and average tariff of Rs 3.89 for 100MW and Rs 3.93 for 800MW. ReNew offered a peak tariff of Rs 6.85 a unit and average tariff of Rs 4.07. A SECI executive said ReNew was opting for battery-storage and GreenKo for pump-storage backup in Andhra Pradesh , Madhya Pradesh , Karnataka and Rajasthan .

SECI will pay peak power at the average of the quoted tariff of the total bids and a trading margin. This works out to an effective peak tariff of Rs 6.37 per unit and off-peak rate of Rs 2.95. The average tariff of both peak and non-peak hours will work out to Rs 4.04, including trading margin.

These compare well with the Rs 4.24 per unit tariff discovered at a recent auction of stressed thermal capacity auctioned for a tenure of three years by PFC and Rs 4.34 in a bidding round conducted by NHPC earlier. In peak hours, discoms pay up to Rs 6.5 to buy power from the open market or peaking sources, mostly gas-fired plants, to meet demand.

“This tender brings storage-based renewable power within reach and allows India to plan giga watt-size projects. The tariffs for storage-based solar power is within touching distance of the average pooled cost of power purchased by various discoms,” a SECI executive said.

Indeed, it is the assured tariff at a reasonably affordable rate that can really spell trouble for coal in the coming days. The auction makes it mandatory for winners to meet six hours of peak demand as per choice of time windows allowed to discoms. This feature of the solar storage project removes a key hurdle — intermittency and ability to supply peaking power — in making solar mainstream.

This provides discoms a financially viable alternative for meeting renewable energy obligation. They can tap solar storage for meeting peak demand, especially in the evening hours, and also fulfil the green commitment.

In addition, solar tariff is levelised for 25 years, while thermal power tariff is for 3-5 years and becomes costlier every time coal prices rise. “This project also has assured supply commitment, including peaking power. These factors give it a huge advantage over conventional power,” the SECI executive said.

