OREANDA-NEWS. Solar power tariffs have risen slightly from record lows in India's latest solar auction, for 500MW of capacity in Gujarat.

The lowest bid in the auction, for 90MW, was made at 2.65 rupees/kWh by a jewelry firm that is diversifying into solar power. The next-lowest bids were from state-controlled utility Gujarat State Electricity and Gujarat Industries Power, at Rs2.66/kWh and Rs2.67/kWh respectively for 75MW each.

Tariffs have increased from a record low bid of Rs2.44/kWh in a May auction run by state-controlled Solar Energy in Rajasthan, a desert state that gets much more sunshine than Gujarat. Prices of solar modules, which constitute a large component of a solar project and are imported from China, have increased in the last few months.

India has now held four auctions for solar power projects this year. But the government issued new rules this month for solar-fired power projects to prevent state utilities from reneging on contract terms that threaten renewable energy targets.

The new guidelines prevent the unilateral termination or amendment of power purchase agreements (PPAs) by either the developer or the utility. PPAs will have a minimum tenure of 25 years in an attempt to provide stable project finances and reduce tariffs. The government will impose a minimum penalty of 50pc of the tariff if the PPA is arbitrarily scrapped by the state or the developer.

Debt-laden utilities in Gujarat, Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Karnataka and Jharkhand are seeking reviews of PPAs, threatening 7GW of solar ventures, according to the Crisil unit of ratings agency Standard & Poor's.