After a long wait of around five years, the Indian government has issued tenders to set up 7.5 gigawatts of solar power capacity in the state of Jammu & Kashmir. The plans to set up large-scale solar power projects were first floated in 2014.
The Solar Energy Corporation of India (SECI) recently issued a global tender to set up 2.5 gigawatts of solar power capacity in Kargil district and 5 gigawatts of solar power capacity in Leh district, both located in the India’s northern-most state of Jammu & Kashmir. This tender is part of the overall solar power installed capacity target for the state of 23 gigawatts. The tender offers one block (solar park) of 2.5 gigawatts in Kargil, and two blocks (solar parks) of 2.5 gigawatts each in Leh.
The government has offered some additional concessions to the bidders in order to attract competitive bids, and, frankly, to bring investors and developers to the state. Jammu & Kashmir has no large-scale solar power project operational. The state has been plagued with militancy for nearly three decades, with Kargil being a theater to the last war between India and Pakistan. Another very important reason for the lack of solar power generation infrastructure in the state is its mountainous terrain, and limited transmission infrastructure to supply large volumes of power generated from power plants.
This tender, thus, explicitly states that project developers will have to install power evacuation and transmission infrastructure as well, in addition to the solar power projects itself. This will definitely result in a significant increase in tariff bids submitted by project developers. States like Rajasthan, Gujarat, and several southern region states have seen record low tariff bids despite having lower solar radiation resources compared to Jammu & Kashmir. This is primarily because they already have ample transmission infrastructure available to support development of large-scale solar as well as wind energy projects.
The concessions offered to the bidders include longer tenure of power purchase agreements of 35 years, compared to the usual maximum 25 years for all solar and wind energy projects. This tenure of 35 years could very well be the longest for any power plant in India. The longer PPA tenure would also mean that the project developers would have to put in new solar panels after their life of 20-25 years is complete in order to fulfill the requirement to maintain the generation.
Other concessions include those similar to the ones offered to developers of Rewa solar power park in Madhya Pradesh — an option to sell additional power generated, first, to SECI itself, and then to the open market. Bidders will have the option to bid for the entire capacity on offer for the two districts. Bidders will also be compensated whenever there are grid constraints and unavailability of grid.
Perhaps the most important concession offered to bidders is the 48-month deadline to commission the projects. This is by far the most lenient timeline offered to commission any solar power project in India. Most projects are to be completed within 12 to 18 months. In this tender, developers will be given 24 months just to achieve financial closure. Developers will also be allowed to commission the projects in steps of 50 megawatts each without facing any financial penalty for delayed commissioning. The maximum time given to achieve full commissioning is 54 months.
This is a landmark tender issued by the Indian government which could attract investment worth $6.5 billion in a very short period of time. Power generated from these solar power parks will be used to meet the demand of Jammu & Kashmir and other states located in northern India.
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