Adani Power and Azure Power have won the latest auction for solar energy projects with bids of Rs 4.78 per unit, higher than the record low of Rs 4.34 set this month. The smaller size of these projects in Uttar Pradesh and the lower level of solar radiation in the state compared with Rajasthan, where the new low was set in the last round, led to the higher price, analysts said.

Prayatna Developers, a subsidiary of Adani Power, and Azure Power India have both been allotted 50 mw at the same price.

In the last three auctions, winners had quoted lower tariffs. Two of them were for projects offered by NTPC in Rajasthan and Andhra Pradesh, while the other was for a project offered by Solar Energy Corporation of India in Maharashtra. The lowest bid in Rajasthan was Rs 4.34 per kWh, a record, while that in Maharashtra was Rs 4.41 and Andhra Pradesh, Rs 4.63.

In Uttar Pradesh, developers will have to acquire land for projects, unlike in Rajasthan and Andhra Pradesh where they will be allotted land in solar parks. Allocation of land as part of the deal in the previous auctions had helped attract foreign companies, which eventually won the projects.

The earlier auctions had also seen higher interest from developers. While there were just seven bidders for a total capacity of 350 mw (against 100 mw on offer) for the Uttar Pradesh projects, there were 20 bidders for 3,850 mw (420 mw on offer) in Rajasthan, 30 for 5,500 mw (500 mw on offer) in Andhra Pradesh and 14 bidders for 1,800 mw (500 mw on offer) in Maharashtra.

Vinay Rustagi, managing director of solar consultancy Bridge to India, said the latest auction did not show any slackening of interest. "The Uttar Pradesh tender was a relatively small one of 100 mw with maximum capacity per bidder of only 50 mw," he said. "The tariff for Uttar Pradesh is higher because of the smaller project size and also due to lower solar radiation in the state compared to Andhra Pradesh, Rajasthan or Maharashtra. Adjusted for these factors, the tariffs are as aggressive as we have seen elsewhere. We expect stability in the market in the near future with tariffs staying in the Rs 4.50-4.75 range for central government tenders."

India is aggressively expanding its solar power portfolio, as it plans to add 1 lakh mw of projects to promote green energy, and is also in the forefront of a global push towards green energy. On Monday, Prime Minister Narendra Modi and French President Francois Hollande jointly inaugurated the interim Secretariat of the International Solar Alliance at the National Institute of Solar Energy (NISE) in Gurgaon. The solar alliance brings together 121 countries for green energy projects.