But the analysts predict the six-month period for bringing plans to fruition will cause financing headaches in a market where banks are wary of renewable investment, and that larger players will step in with funding, in return for taking majority stakes in successful developments further down the line.
Bridge to India pointed out that under the terms of the Andhra Pradesh scheme, photovoltaic project developers can transfer their majority shareholding a year after the commissioning phase of new schemes.
The Andhra Pradesh scheme is similar to that seen in fellow southern state Tamil Nadu. The state government has announced tariff-based bidding for 1 GW of projects and has released a list of power sub-stations which can host renewable electricity. The maximum capacity of the sub-stations varies from 5 to 20 MW, and will determine the maximum size of any schemes nearby, with the minimum project size set at 1 MW.
Developers, who have to identify a suitable location and arrange permitting, will bid for the tariff they will receive with the lowest price at which a sufficient number of bidders can compete being the agreed price.
Bridge to India estimates projects in Andhra Pradesh will have a net worth of around INR10 million/MW (US$180,000/MW) insufficient to attract big international investors at that stage.
Under the terms of the auction, developers could build CSP plants, but Bridge to India says the low maximum capacity of the sub-stations means CSP would not be viable.
The Tamil Nadu scheme has already achieved grid parity for solar, according to the New Delhi-based consultancy, which calculates that a tariff of INR6.2 (US$0.12)/kWh will be generated across the state for the 1 GW of utility-scale projects. That would be India’s lowest tariff, beating the INR7/kWh for the 25 MW of projects announced by Odisha in February 2012.
Tamil Nadu is the seventh of India’s 28 states to announce a solar target, in its case 1.5 GW of extra capacity from utility-scale with 1 GW from the reverse bidding process and 500 MW from private PPAs. The electricity would be sold to the Tamil Nadu Generation and Distribution Company Ltd (TANGEDCO) with the ultra-low tariffs rising 5% annually for ten years.
The state is targeting a further 350 MW from rooftop installations, of which 300 MW would be provided on government buildings.