A fourth solar plus storage project in India has been cancelled, raising serious doubts about the preparedness of Indian developers to successfully implement such projects.
NLC Limited cancelled a solar plus storage project of 28 megawatt-hours of capacity that it had allocated for implementation in the Andaman & Nicobar Islands. The project was the first utility-scale solar storage project auctioned and allocated in the country.
The project was awarded to Mahindra Susten and was supposed to have an installed capacity of 20 megawatts with a storage capacity of 28 megawatt-hours.
Mahindra Susten had quoted a bid of Rs 288 crore ($44 million) for the project. The cost is more than twice that of the large-scale solar power projects not equipped with storage facilities. Mahindra Susten was to receive a Rs 100 crore ($15 million) grant from the government for setting up the project. However, the company states that even without the grant the cost of generation would be around Rs 8/kWh (12¢/kWh) which is 60% cheaper than the cost of generation from diesel generation, the primary power source on the islands.
The Solar Energy Corporation of India has so far cancelled tenders for two solar storage projects at two different solar parks in the states of Karnataka and Andhra Pradesh. The total capacity of these projects was envisaged at 300 megawatts. India’s largest power generation company, NTPC Limited, also cancelled a tender for 50 megawatt solar-storage project planned in Andaman & Nicobar Islands.
SECI cancelled the planned tenders after comments from project developers stating that the tariffs would be significantly higher than non-storage projects. Financial viability of these projects would have come under scanner as power distribution utilities are seeking record low tariffs from solar projects.
SECI has now again called for expressions of interest from project developers for development of a 160 megawatt storage-equipped solar-wind hybrid power project in the state of Andhra Pradesh. The intent of this exercise is to ‘only learn about the market scenario’ and may or may not result in an auction.
As for the NLC tender for Andaman & Nicobar Islands, the company plans to launch a fresh tender for 8 megawatt-hours of storage capacity. Additionally, the Military Engineering Services has also announced plans to launch two tenders for 1 megawatt-hour each for the Islands.