India’s thermal power plants are facing a serious fuel supply shortage leading to widespread load shedding across many states. Additionally, some private power producers have shut down production due to differences with utilities in a number of states. Power cuts and load shedding is a familiar occurrence for the southern states. The newest making adjustments, Telangana, has issued a large solar power tender in an attempt to bridge the gap between power supply and demand.
The Telangana government has issued a tender to install 500 MW solar power capacity. The projects will be allocated through reverse auction, and the winners are expected to be announced by the end of this month. Once the winners are announced, and all agreements have been signed, the project developers will have only 10 months to commission their projects.
The new state, which was carved out of erstwhile Andhra Pradesh has, since the beginning, urged the central government for assistance in power supply. According to media reports, the state requires about 4,000 MW of demand every day, while it can arrange for only 3,500-3,600 MW. Hence, the government is looking to develop large solar power projects to meet the excess demand.
Ever since the division of the former Andhra Pradesh, the two new states have been locked into a battle of sorts to attract renewable energy investors. A 1,000 MW solar power project planned before the division is planned in a district which now sits insides the borders of Telangana. This motivated the Andhra Pradesh government to announce its own 1,000 MW solar power plant. The state also announced an ambitious plan to add 5,000 MW solar power capacity and 4,000 MW wind energy capacity by 2019. The Andhra Pradesh government had, only last month, issued its own 500 MW solar power tender.
The need for solar power capacity in the southern states stems from the poor power availability in the region. The southern states are connected with the rest of India through a handful of power transmission lines, which results in huge congestion while power transmission. So, even if a state has surplus power or is willing to sell electricity to the southern states, the adequate transmission capacity isn’t there, or the prices are too high.
The southern states are also home to large number of gas-fired power plants sitting idle for months for want of adequate fuel supply. The expected gas supplies from one of the biggest gas fields in the country, the Krishna-Godavari basin, never came.
The healthy competition between Telangana and Andhra Pradesh is a boon for the solar power project developers, and the solar power sector as a whole. Capacity addition is expected to zoom again after months of lull during the final months of the previous government.