Published on August 14th, 2019 | by Saurabh0
1.2 Gigawatt Solar Tender In India Receives Muted Response
August 14th, 2019 by Saurabh
Yet another solar power tender in India has received a surprisingly muted response, fueling worries that developers are looking for assurances and action from the government.
The fifth national-level solar power tender issued by the Solar Energy Corporation of India (SECI) received bids for just 600 megawatts against the offered capacity of 1,200 megawatts. Only two companies submitted bids for the tender.
SECI issued the tender in late June, with a maximum allowed tariff bid at ₹2.65/kWh. While this was not the first time that a tariff bid threshold had been set, it was the lowest set by SECI.
The two companies that submitted bids are SB Energy (backed by Japan’s Softbank) which bid for 450 megawatts of capacity and GRT Jewellers which bid for 150 megawatts of capacity. The financial bidding round is yet to be organized by SECI.
As the tender has been undersubscribed, SECI will now offer 80% of the total capacity bid for by the developers, if it still plans to go ahead with the financial auction. A total capacity of 480 megawatts is expected to be put up for auction in the final round.
Some industry watchers have claimed that the decision by SECI to set a maximum tariff bid limit is the primary reason behind the lack of interest shown by project developers. Additionally, the current uncertainty around the long-term power purchase agreements for the state as well as central sector power plants located in the state of Andhra Pradesh is another important factor in this auction.
There are at least two instances in the last two months that cast doubt over the theory that developers stayed away from this particular tender due to the low tariff bid threshold. The fourth national-level solar power auction conducted by SECI in June was oversubscribed by 700 megawatts. SECI had set a maximum allowable tariff bid of Rs 2.65/kWh, while the lowest winning bid in the auction was at Rs 2.54/kWh which was the same as the lowest bid in the third national-level solar power auction as well.
Also in June, SECI auctioned 750 megawatts of solar power capacity on behalf of the state of Rajasthan. The maximum allowed tariff for this tender was Rs 2.68/kWh and was oversubscribed by 350 megawatts. The 750 megawatts of capacity was allocated among four projects, each of whom submitted a bid of Rs 2.50/kWh each.
It may be the case that the tariff bid threshold may not be a major issue or an issue at all. However, the overhanging issue of the Andhra Pradesh government looking to cancel long-term power purchase agreements with operational and planned projects is a serious issue that threatens the renewable energy as well as the banking sector in India and must be resolved at the earliest.