As part of its renewable purchase obligation, Indian utility the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has announced a solar tender for 1.5 GW of solar through reverse auction, with June 15, 2017 set as the last date for submission of bids.
Developers will be able to bid for a minimum capacity of 1 MW and a maximum capacity of up to 500 MW, and TANGEDCO has set the upper tariff limit at INR 4 ($0.062)/kWh, reports Mercom Capital Group.
With TANGEDCO as the off-taker, the auction’s winners will sign power purchase agreements (PPA) at a fixed tariff for a period of 25 years.
Furthermore, projects smaller than 50 MW will get 12 months from the signing of the PPA to complete installation, while bigger ones will have a period of 24 months.
According to Mercom, the 24-month deadline for completion of projects is one of the longest ever seen in India and could attract some really low bids.
The direction in which the prices of solar energy in India are going remains clear: earlier this week a new record low was set with Acme Solar’s winning bid of INR 2.44 ($ 0.037)/kWh in the 500 MW Bhadla Phase-III Solar Park auction.
Compensation for generation loses is also be specified in the terms, so in case the developer faces grid unavailability for more than 175 hours in a financial year, the excess generation by the project in the succeeding financial years will be procured by TANGEDCO at the PPA tariff.
However, as Mercom noted, the corporation’s poor reputation for late payments and curtailment issues may scare away developers. In this instance, however, if project commissioning is delayed beyond five months, in addition to 100 % encashment of the Performance Bank Guarantee, the developer will pay TANGEDCO a sum of INR 10,000 ($155.53)/MW per day of the delay.
Looking back on TANGEDCO’s earlier tenders, TANGEDCO tendered 500 MW of solar and received bids to develop just 177 MW in February, and last November another 500 MW and got technical bids to develop only 300 MW of solar.