The Solar Energy Corporation of Indias 500 MW solar PV tender in in the state of Maharashtra has attracted bids from 14 developers for a total capacity of less than 1.8 GW, according to renewable energy research and consultancy group Bridge to India.
Details of the tender include:
- A fixed tariff of INR 4.43 per kilowatt hour and viability gap funding (VGF) of up to INR 10 million per megawatt (INR 13.1 million/MW for DCR category) payable in six installments (50% on project COD, followed by five annual installments of 10% each).
- Bidders will be allocated projects on the basis of most competitive VGF quotes.
- A minimum project size of 10 MW, with no maximum limit.
- Participating developers must procure their own land.
- 50 MW of the tenders total capacity is reserved for modules that meet Indias domestic content requirement.
While the tender has received bids from 14 developers for a total capacity of less than 1.8 GW, it is far below the number of bids received by the recent 500 MW tender in the state of Andhra Pradesh held by the state-owned national utility group NTPC, which received bids from 30 developers amounting to 5.5 GW.
Source: Bridge to India
Bridge to India said bid response was highly subdued as compared to recent allocations by NTPC and some states. It pointed out that the Ministry of New and Renewable Energy (MNRE) reduced the fixed tariff drastically from INR 5.43/kWh (plus an annual escalation of INR 0.05/kWh for 20 years) in earlier VGF rounds, taking note of recent bids of INR 4.63/kWh in Andhra Pradesh, just 10 days before bid submission.
The consultancy added that it expected a similar muted response for SECIs three upcoming tenders in Uttar Pradesh, Gujarat and Andhra Pradesh.
Bridge to India said the SECI tender had two key differences in comparison to other recent tenders, which are likely to result in higher tariff (or VGF) expectations for developers. As these projects will be implemented outside government solar parks, land acquisition will be a challenge for developers particularly for large project sizes. The research group says contiguous land is unlikely to be available in large sizes, so developers will not be able to benefit from economies of scale.
Secondly, the markets higher risk perception of SECI as an off-taker in comparison to NTPC is also likely to have an upward impact on the bids. Finally, we believe that the recent hardening of module prices and INR depreciation against the USD may also have a similar upward impact on the bids.
SECI has issued three other tenders for projects in Gujarat (250 MW), Uttar Pradesh (440 MW) and Andhra Pradesh (500 MW) under the VGF mechanism. Bids for these tenders are expected over the next two months.
We expect similar muted response for all three tenders for various reasons including smaller project sizes, low radiation (Uttar Pradesh) [and] high solar park charges (Gujarat).