The latest solar tender by the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has set a new record-low tariff for the Indian state of INR 3.47 ($0.053)/kWh.

This is the lowest price yet set in the sun-rich state, and brings Tamil Nadu close to the INR 3/kWh threshold, which has been undercut in a handful of states so far. The cheapest solar tariff successfully lodged is at the Bhadla Solar Park in Rajasthan, at a rate of INR 2.44/kWh ($0.037/kWh).

Local developer Raasi Green Earth Energy was awarded a contract to develop 100 MW of solar PV at the INR 3.47/kWh rate, while a TANGEDCO official confirmed that a number of other local developers were each able to offer tariffs below INR 4/kWh.

“Sai Jyothi Infrastructure Ventures Private Limited quoted INR 3.60 ($0.055)/kWh to develop 54 MW; Solitaire BTN Solar Private Limited quoted INR 3.69 ($0.057)/kWh to develop 150 MW, and Narbheram Vishram and NVR Energy Private Limited quoted INR 3.85 ($0.059)/kWh to develop 100 MW each,” the TANGEDCO official told Mercom Capital Group.

Ray Power Infra also won the right to develop 200 MW at a rate of INR 3.85/kWh, with ReNew Solar Energy Rajasthan Limited winning a 100 MW development contract at the rate of INR 3.89/kWh.

Aside from the record-low winning bid, the Tamil Nadu auction was noteworthy in that it attracted lots of small players bidding for volumes below 10 MW, and doing so at competitive rates of around INE 3.90/kWh per unit.

“We are happy with the tariffs quoted,” continued the TANGEDCO official. “We knew due to GST [Goods and Services Tax] rate implementation we would not get a Bhadla tariff rate. But even the INR 3.47/kWh is revolutionary for Tamil Nadu.”

In 2015, TANDEGCO was receiving bids at a rate of around INR 7.01/kWh per unit, and last year the average auction tariff rate hovered around INR 4.5/kWh, but even with the increased GST of 5% for solar components, the cost of setting up solar projects in the state has never been cheaper.