India interstate charge waiver prompts new 750 MW solar tender from SECI

The maturation of India’s solar market continued at speed this week following two seismic announcements that have served to complement one another and further grease the wheels of PV development.

The decision earlier this week by the Ministry of New and Renewable Energy (MNRE) to waive interstate transmission charges for solar power was welcomed by the industry, and has prompted the Solar Energy Corporation of India (SECI) to tender an additional 750 MW of PV capacity at the Bhadla Solar Park.

According to Mercom Capital Group, SECI has disclosed that the capacity to be tendered will supply the state of Uttar Pradesh, but will be installed at the Bhadla Solar Park, which is located in Rajasthan. With the removal – at least until 2019 – of charges for sharing solar power across state boundaries, SECI can now take advantage of Rajasthan’s exceptional solar irradiation and abundance of land to supply Uttar Pradesh.

The Bhadla Solar Park is the ideal installation location for additional solar capacity, having been the site of record-low tariffs of INR 2.44/kWh (around $0.037/kWh) in the auctions for Phase-III and Phase-IV. The state governments of Rajasthan and Uttar Pradesh will work with SECI to see that this additional capacity is both built in a timely manner (the interstate charge waiver applies only to solar commissioned before December 31 2019) and optimally transmitted.

India’s Central Transmission Utility (CTU) will undertake the transmission of power, thereby removing charges previously levied on developers and the states involved. Once commissioned and transmitted in time, the waiver applies for 25 years.

According to Mercom Capital Group, SECI and the state agencies involved had been waiting for the MNRE to announce the waiver before committing to the new tender.

“This is a welcome change for the sector as it will help to stabilize solar tariffs in the country,” an MNRE official told Mercom. “The cost of solar has fallen drastically in the country, and the extension of the waiver period will help allay developer fears.”

The MNRE’s decision to introduce such a waiver was praised by Mercom Capital CEO Raj Prabhu, who remarked: “The extension removes uncertainty and will help solar projects get developed in resource-rich areas while spreading solar power consumption across the country.”

SECI’s 750 MW tender will invite reverse auction bids up to August 31, with a target to begin generating power from the installation by October 2018.