Analyzing solar auctions in India: Identifying key determinants

Solar technology has been identified as a key tool to fight climate change. The sector, promoted by several policy enablers, has seen a rapid growth in terms of deployment, with the global capacity reaching 390 GW at the end of 2017. In recent years, an increasing number of countries are adopting auctions to award solar contracts, resulting in steep tariff reductions. Researchers, while analyzing solar auctions, focused on ground level deployment, without capturing other factors influencing the investors' decisions. India, with its ambitious solar plan, has seen numerous contracts being awarded under auction schemes run by its federal and state agencies. We regressed eleven variables across thirty-two solar tenders issued in India between 2014 and 2017. Analysis of these auctions brought out a different set of determinants for federal and state programmes. On an overall basis, factors like solar targets, utilities' credentials and the level of subscription came out as strong determinants. Additionally, cost of funds and module price figured as drivers in the federal bids. Possible recommendations include spatial and temporal spacing of bids, sale to multiple off-takers and provision of risk guarantee funds. These factors may be taken into consideration by Indian Policy makers while designing solar tenders.