Published on August 5th, 2015 | by Anand Upadhyay3
Telangana Allocates 2,000 MW — India’s Largest Solar Tender
August 5th, 2015 by Anand Upadhyay
On Monday, Telangana announced the final results for its 2,000 MW solar tender, the single largest solar power allocation in India till date.
The state-owned utility, Telangana State Southern Power Distribution Company Limited (TSSPDCL), was responsible for floating the 2 GW solar tender. Telangana had offered prospective developers projects through competitive (reverse) bidding with a ceiling tariff of up to ₹6.45/kWh ($0.104/kWh).
The power purchase agreements will last for 25 years from the date the solar power plants commence commercial operations.
As per media reports, 184 companies had initially shown interest, and bids for a total of 4623 MW were received from 85 technically qualified bidders (list of these bidders is available here). The weighted average tariff of the bids stood at ₹5.73/kWh ($0.092/kWh).
The Hindu reported that in light of the good response to the call, Chief Minister K. Chandrasekhar Rao asked the energy officials to increase the quantity of solar power purchases in tune with the number of applications received for the bids.
Mauritius-based SkyPower Southeast Asia Holdings once again emerged as the lowest bidder in the auctions. The company had bid ₹5.17/kWh ($0.083/kWh) for a 50 MW solar project unit. SkyPower also won three additional projects of 50 MW capacity each.
Prior to the Telangana allocation, SkyPower had bid the lowest in Madhya Pradesh (which is also the lowest solar bid in India for now).
Generally speaking, this trend of falling solar bids is expected to continue in the projects that will go under the hammer during National Solar Mission capacity allocation in the upcoming weeks.
New Delhi-based consultancy Bridge To India contemplated that compared to Telangana, developers have bid more aggressively in last month’s tender in Madhya Pradesh as they were allowed a generous 18 months to commission the projects rather than the usual time period of 11 to 12 months. As a result, developers are betting heavily on cost reductions by the time Madhya Pradesh projects enter the construction phase. Madhya Pradesh has also provided land to developers at a lower cost.
Capacity-wise, Delhi based ACME Solar seems to have been the biggest gainer.
ACME is said to have won at least 446 MW (22%) of the 2 GW solar pie that was up for grabs, at an average tariff of ₹5.84/kWh ($0.094/kWh). The company had bid for 510 MW solar capacity. With this development, ACME claims to have become the largest solar power player in distributed power generation in India.
Other prominent names in the competition include SunEdison, Adani Power, Reliance Power, Suzlon Energy, Shapoorji Pallonji, Hero Future Energies, and Fonroche Energie SAS. However, finals are still awaited, as bids are being evaluated location wise.
Suzlon, which is said to have bagged orders worth 210 MW would be the first among wind companies in India to have jumped into the solar wagon.
Last year, the Telangana state government had auctioned off 500 MW worth of solar power capacity and received a very healthy response. Even then the tender saw some serious action from the leading players in the solar sector, with the gap between the lowest and highest tariffs quoted in the winning bids being narrow at less than ₹0.50/kWh ($0.008/kWh).
Telangana has an ambitious plan to add 5 GW solar power capacity and 4 GW wind energy capacity by 2019. The state is said to have a solar potential of 20 GW.
The state has also announced its solar policy which will be in effect over the next five years and proposes a number of incentives to project developers (PV and thermal). These include among other things, single-window clearance for solar projects, complete refund of value-added tax and goods and services tax (GST), exemption from electricity wheeling charges and consent from the state pollution control board within seven days.
All solar projects that are commissioned while the policy is in force will be eligible for the incentives for a period of ten years from the date of commissioning.
The state expects about 800 MW of solar capacity to come online by March, next year. While the capacity allotted in the current tender should start feeding into the grid by the end of 2016.
Telangana has been in a tussle with its neighbor Andhra Pradesh to attract solar investment. 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. The healthy competition between the neighbors has been a boon for the solar power project developers, and the solar power sector as a whole.
Both Telangana and Andhra Pradesh have signed separate agreements with the Solar Energy Corporation of India to set up ultra mega solar power plants of capacity 1 GW each. So apart from the state-level auctions, the central government will also organize auctions for at least 1 GW solar power capacity in the near future.