India State Issues Fresh Solar Tender For 1 Gigawatt Capacity

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The Indian state of Maharashtra has issued a fresh tender of 1 gigawatt of solar power capacity to fulfill its Renewable Purchase Obligation.

Maharashtra State Electricity Distribution Company Limited (MSEDCL) recently issued the third tender under its program of long-term solar power procurement through competitive bidding. The company had earlier issued two tenders of 1 gigawatt capacity each.

Under the terms of the third tender, MSEDCL seeks bids from project developers to supply power from projects in order to meet its RPO targets. The maximum allowed tariff bid has been fixed at Rs 2.80/kWh (4.03¢/kWh).

Project developers will be free to set up projects within the state of Maharashtra or anywhere else in the country. Developers who wish to set up projects within the state must bid for a minimum capacity of 5 megawatts while those looking to set up projects outside the state must bid for a minimum capacity of 50 megawatts.

MSEDCL mandates that the capacity utilization factor of the power plants must not be less than 19% over a year. If the generation falls below the committed level then the project developer shall be required compensate to MSEDCL. On the other hand, in case of excess generation, MSEDCL will have the first right of refusal to procure the excess generation at 75% of the tariff agreed upon. However, if MSEDCL refuses or fails to procure excess generation then the project developers are free to sell the excess generation wherever it wants. This is a crucial leeway available to the project developers and an incentive to generate additional energy, and revenue.

Developers would be required to commission projects in a solar park within 15 months of signing the power purchase agreement. For developers looking to set up projects outside a solar park, this deadline is 18 months from the date of signing the power purchase agreement. There are provisions for penalty as well for delayed commissioning.

Maharashtra has been very aggressively issuing large-scale power tenders over the last few months in an attempt to meet its target to have 7.5 gigawatts of solar power capacity operational by March 2022. The state auctioned 1 gigawatt of capacity in May 2018 under the first tender to fulfill RPO through long-term procurement. The lowest tariff bid in that auction was Rs 2.71/kWh (3.90¢/kWh). It again auctioned 1 gigawatt of capacity under the second tender with the lowest tariff being Rs 2.74/kWh (3.94¢/kWh).

MSEDCL also issued a tender earlier this year to auction 1.4 gigawatts capacity across 30 locations in the state. Bids to develop just 1.17 gigawatts capacity were received. The company is now in the process to negotiate tariffs for these projects. At the same time another tender was issued to set up 1 gigawatt of floating solar power projects in the state. Last month, the Solar Energy Corporation of India (SECI) auctioned 250 megawatts of capacity at a solar power park in Maharashtra. The lowest bid in the auction was Rs 2.87/kWh (3.87¢/kWh).

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