India’s attempt to boost domestic manufacturing in the solar power sector has taken a hit with poor response to a large solar power tender focused at companies owned by the government.
The Solar Energy Corporation of India (SECI) had issued a tender for 2 gigawatts of solar power capacity in March. As per the tender conditions, only companies which are owned by the state governments and/or the central government could bid for setting up the projects.
The tender was part of a much larger scheme wherein 12 gigawatts of solar power capacity will be auctioned off to public sector companies. Solar power projects installed under this scheme are mandated to use only Indian-made solar modules. This scheme was drafted by the government of India in response to the World Trade Organisation judgement against its Domestic Content Requirement policy.
Using a workaround to that judgement, the Indian government restricted this domestic content requirement to public sector companies only and thus issued this tender.
However, the response from public sector companies to this first tender was very poor. Only five companies submitted bids for this tender, offering to set up just 1,068 megawatts of capacity. India’s largest power generation company, NTPC Limited, submitted a bid to set up 1 gigawatt of capacity. Two other companies, NHDC Limited and Assam Power Distribution Company Limited, offered to set up 30 megawatts of capacity each. Two other entities also submitted bids for a total of 8 megawatts of capacity.
Now that the tender has been undersubscribed the SECI is expected to auction only 80% of the capacity for which bids have been submitted. The capacity of around 854 megawatts is now expected to be offered for the financial round of bidding. If NTPC quotes the lowest tariff rate it could be awarded the entire 854 megawatt capacity.
It is surprising that other public sector companies did not participate in the tender as several companies have announced ambitious plans to increase the use of renewable energy. Companies and entities like the Indian Oil Corporation, Coal India Limited, NLC India Limited, and Indian Railways have expressed intentions to either set up or procure large-scale renewable energy capacity, but did not participate in this tender.
The poor response to the tender was despite some pro-bidder amendments implemented by the SECI. Apart from land-based projects, micro and mini-grid power plants were also allowed. Second, these projects were exempt from inter-state transmission charges; third, bidders are also allowed to use the projects for auxiliary consumption. Additionally, the project implementation deadline was also increased from 18 months to 24 months with the maximum allowed time limit for project implementation being increased from 24 months to 30 months.
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