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The encyclopedia · Strategy & Leadership · Strategic decision · 2017–2018

India auctioned solar contracts and prices fell to ₹2.44 per kilowatt-hour.

India reverse-auctioned solar with a price ceiling instead of a set subsidy, driving tariffs to a record ₹2.44/kWh (about $0.0355).

Solar Energy Corporation of India · ACME Solar Holdings · Government of India

the move

India wanted solar at scale and cheap. Rather than fix a tariff by decree, the Solar Energy Corporation of India ran reverse auctions where developers bid the price, and repeated rounds pushed bids down.

For a 3 GW interstate-connected solar auction in mid-2018, ACME Solar raised the lowest bid at ₹2.44 per kilowatt-hour, about $0.0355. This matched record lows first set at the Bhadla park and confirmed that a competitive auction could call a far lower price than an administered tariff.

The buyer only committed to buy at the price the market revealed, so the risk of overpaying went to the auctioned contracts instead of the public purse.

why it works

  • Reverse auctions force developers to bid their real cost down to the marginal project.
  • A ceiling price caps what the government will pay while still allowing an efficient low bid.
  • Repeated rounds publish a visible learning curve that pulls all future bids down.
  • The winner bears the risk, so bids cannot rely on a guaranteed margin.
the payoffAuction the price; let bidders reveal the true costclever

what transfers

If you want to discover a true price, do not set it: run a reverse auction for a standardized product and let competing bidders reveal what it costs.

what came after

Tariffs kept falling toward ₹2.44 and below, shrinking subsidies and pulling India's solar rollout into the global spotlight. The ultra-low prices later squeezed developer finances, slowed some projects, and led to renegotiation and curtailment disputes, showing a price competition can be too good for the builders.

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