Indian state fires gun on 2 GW solar auction

The developers keen to take a slice of India‘s most ambitious public tender gathered in Hyderabad this morning (Friday) to learn more details about the state of Telangana‘s 2 GW reverse-bidding auction.

With India as a whole having installed only around 3.5 GW of solar to date, the nation’s newest state last week announced plans to take solar’s share of power generation to almost half of the 5.7 GW capacity listed in an appendix to the request for selection document published last Wednesday.

The 2 GW tender, which follows a hugely oversubscribed 500 MW allocation late last year, has allocated a maximum power price of INR6.45/kWh ($0.104/kWh) for projects smaller than 8 MW in size – the same level as the lowest bid tendered in last year’s exercise, by U.S. thin film giant First Solar.

For projects of 8 MW and larger, the ceiling under which developers will vy for the lowest power price will be INR6.32/kWh ($0.10/kWh), reflecting the fact last year’s 500 MW tender prompted 1.85 GW worth of generation capacity.

The state, which was separated from the state of Andhra Pradesh of which Hyderabad is also the capital as India’s 29th state on June 2, has allocated 500 MW of capacity for smaller projects with 8 MW-plus schemes making up the remainder.

Nalgonda district is the glittering prize

The minimum project size is 2 MW, in line with the capacity listed for the small sub-stations at Dubbak, Khajipur, Chittapur and Habsipur, in the Medak district.

The maximum project size is determined solely by available evacuation capacity and the prize First Solar and other big players will be eyeing up is a 450 MW allocation in the Nalgonda district which offers the largest slice of available capacity, at 600 MW for the whole district. The Smallest district is Rangareddy South, with 100 MW of available capacity.

After today’s pre-bid meeting in Hyderabad, bids have to be in by May 15, giving developers barely time to read the 97-page request for selection document issued by the Southern Power Distribution Company of Telangana Ltd and its Northern counterpart.

Prospective bidders will note the state reserves the right to alter the terms of its request for selection, and its 25-year PPAs, by April 24.

Once PPAs are signed, developers are expected to have projects operational within a year – by July 21, 2016 – and incentives will be offered for earlier completions.