The huge number of solar power auctions being issued by various agencies across India have finally forced the Ministry of New and Renewable Energy to propose a schedule for all issuing agencies.
The Ministry of New and Renewable Energy has proposed that the Solar Energy Corporation of India, central government companies, and state agencies plan their solar power auctions in a manner that none will overlap each other. This would help participating companies to plan their auction strategy.
According to the letter, SECI will hold auctions in the last month of each quarter, while public sector companies, like NTPC Limited and Indian Railways, will hold auctions in the first month of each quarter. State agencies will conduct auctions in the second month of each quarter.
This clear schedule would enable companies to plan their cash flows in order to meet all financial requirements to participate in the tender. At present, tenders are issued in a completely haphazard and ad-hoc manner.
A schedule would also allow developers to pick and choose the tender they want to participate in. Usually, tenders issued by SECI and public sector companies are more attractive to project developers due to a higher probability of timely payment.
Due to the lower probability of timely payments, tenders issued by state agencies receive higher tariff bids. To address this issue, the MNRE has proposed to reduce the maximum allowed tariff bid for SECI tenders from ₹2.93/kWh to ₹2.50/kWh. States would definitely like to implement this reduction in their tender conditions so as to reduce the cost of power to them, but they may also have to address other overhanging issues, like timely payment.
The directive to schedule solar power auctions is not binding on the states, but they may be binding on SECI and public sector companies. The states may choose to follow their own schedule, and issue tenders as and when required.