Published on October 17th, 2018 | by Saurabh0
India Relaxes Clauses For Largest Floating Solar Tender
October 17th, 2018 by Saurabh
The Solar Energy Corporation of India (SECI) has given a seventh extension to the largest floating solar power tender in India. The agency has been forced to given such repeated extension due to the uncertainty associated with such projects, and the safeguards duty issue that played out over the last few months.
SECI first issued this tender in April this year, and had called on developers to place bids to set up projects at the Rihand Dam in that state of Uttar Pradesh. The dam is India’s largest by volume, and is the country’s largest artificial lake. The gravity dam also hosts a 300 megawatt hydro power generation plant.
The tender called upon the project developers to submit bids to set up 150 megawatts of floating solar power projects, with blocks of 50 megawatts each. The tender has been floated by SECI, on behalf of Uttar Pradesh Power Corporation Limited (UPPCL) which will sign the power purchase agreement with the project developers.
With this extension, SECI/UPPCL have also issued some significant amendments to the initial tender conditions.
An important change in the tender clauses is the maximum tariff allowed. It is understood that the initial maximum tariff allowed was reduced from Rs 3.50/kWh to Rs 3.32/kWh. With this reduction SECI also stated that the Rs 3.32/kWh tariff shall be inclusive of Rs 0.18/kWh impact of the safeguards duty imposed on solar cells from China and Malaysia recently implemented by the Government of India. The developers using modules based on solar cells imported from these countries were given leeway to add Rs 0.18/kWh to their bids. If, however, it was later found that these developers did not pay any safeguards duty, this incremental tariff would be withdrawn.
This clause has now been modified with the maximum tariff still at Rs 3.32/kWh, but with no mention of reduction of tariff linked to safeguards duty.
Developers would also get an additional 33% area to set up each 50 megawatts of capacity. The initial area on offer of 0.6 square kilometers has now been increased to 0.8 square kilometers. Developers shall also now be given 90 days from the date of issuance of Letter of Intent to submit a Performance Bank Guarantee, instead of the earlier 30 days.
Each successful bidder is required to pay ‘Success Charges’ to SECI. Developers will be given an additional 60 days (for a total of 90 days instead of the earlier 30 days) to pay these charges from the date of issuance of Letter of Intent. Power Purchase Agreements, too, shall be signed within 90 days, instead of the earlier 30 days from the date of issuance of Letter of Intent.
Successful bidders will also be given an additional 45 days to submit the required documents to SECI. Initially, developers were given just 15 days. Successful bidders shall now have 12 months to achieve financial closure for the projects, up from the initial 9 months from the date of signing the power purchase agreements.
SECI, and UPPCL were likely forced to relax the terms of the tender as high bids are expected from developers. The project is a first-of-its-kind and would be the largest floating solar project in the country, if not the world. Developers, contractors, as well as bankers would be apprehensive about this project. Additionally, the developers would be signing PPAs directly with UPPCL and SECI would not be involved directly. This represents a significant added risk related to timely payments.
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