The Indian government has issued the first tranche of the 12-gigawatt self-use solar power tenders as it looks to support Indian manufacturers of solar cells and modules. The self-consumption of power generated from these power plants shall be achieved through government-owned public sector companies.
The Solar Energy Corporation of India (SECI) recently issued a tender inviting project developers to set up 2 gigawatts of solar power capacity. The projects can be set up anywhere in the country with the power being procured by companies owned by the central government.
These public sector companies will be able to procure the generated directly or through power distribution utilities. In either case, the final cost of electricity procured shall not exceed Rs 3.50/kWh (5.06¢/kWh) which is quote cheaper than the price of electricity these companies procure through other means. Project developers will bid for capital cost support required to set up the projects. The maximum bid allowed is Rs 7 million (~US$100,550) per megawatt.
The tender also mandates participating project developers to use only Indian-made solar cells and solar modules. This clause has been added in order to support the Indian manufacturers which are financially struggling for several years despite the sharp rise in operational solar power capacity in the country. The sharp rise in capacity and even sharper decline in tariff bids is largely due to the flood of cheap imported solar cells and modules which have a share of around 90% in the total equipment installed.
Project developers will be free to choose the location of the project and can bid for capacity between 10 megawatts and 2,000 megawatts. The mechanism of the power sale could be similar to other SECI national-level solar power projects. Project developers will sign power purchase agreements with SECI which in turn would sign power sale agreements with the public sector companies, directly or through power distribution companies.
The tender is part of a 12-gigawatt mechanism set aside within the National Solar Mission. The mechanism was recently approved by the central government to support the domestic solar cell and module manufacturers. India had tried its hand at including mandatory provisions for use of Indian-made solar cells and modules. Such provision were challenged and defeated by the United States at the World Trade Organisation.
The WTO rules, however, allow for mandatory domestic content usage in case the projects serve the government or its subsidiaries due to security concerns. India has invoked that exemption to support its domestic solar equipment manufacturers.
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