NTPC and ACME Solar in a Tariff Dispute over Recent 2 GW Solar Auction

NTPC introduced a two-part tariff including safeguard duty, which has been challenged by ACME Solar in Delhi high court


The National Thermal Power Corporation (NTPC) and project developer ACME Solar have been embroiled in a legal battle pertaining to a recent solar auction for the development of 2 GW of solar projects.

The auction, which was conducted in August 2018, has become the bone of contention between the two parties after NTPC decided to introduce a two-part tariff, including the safeguard duty component.

Per Mercom’s India Solar Project Tracker, ACME Solar quoted the lowest (L1) tariff of ₹2.59 (~$0.0372)/kWh to develop 600 MW. Shapoorji Pallonji and Azure Power matched the L1 tariff to develop 500 MW and 300 MW respectively. SB Energy won the bid to develop 600 MW at a bid of ₹2.60 (~$0.0373)/kWh.

The tariffs discovered in this auction were attractive considering the imposition of safeguard duty. According to a market insider, problems surfaced when NTPC, after the culmination of auction, decided to include a two-part tariff, of which one would have the safeguard duty component.

Per the market insider, NTPC had proposed two options. The developers could either pay the safeguard duty when purchasing modules for these projects and then avail the respective tariffs that they had quoted in the reverse auction or the NTPC would reduce the safeguard tariff component from the final tariffs quoted by the developers.

Now, ACME has filed a petition in the Delhi High Court seeking relief from NTPC’s ‘draconian’ imposition of the two-part tariff. When contacted, Mercom’s source at ACME chose not to comment on the situation as the case is under consideration by the judiciary.

On its part, the Delhi High Court has accepted the petition and fixed January 30, 2019, as the next hearing date. Mercom’s source at ACME was hopeful that the High Court will provide relief in the matter.

Another developer who had won projects in this auction said, “What NTPC has done is sort of a counter proposal from them and when they had issued the letters of intent, almost all of us had opposed the move as far as I can recall”.

NTPC had tendered the capacity in March 2018. Later, Indian solar project developers complained to the MNRE that the maximum allowable capacity to be bid for in this tender was too large. The domestic developers reasoned, “Such a large bid size will prohibit some of the serious players based on financial criteria such as net worth requirement, turnover requirement, line of credit etc. Restricted competition may not provide the desired tariff levels.”

Following the imposition of safeguard duty,  NTPC had provided bidders until August 13, 2018, to revise and resubmit their bids for the 2 GW tender.

NTPC’s 2 GW ISTS-connected solar PV tender was oversubscribed three times over. Bids amounting to 6,200 MW were submitted in response to the tender.