WIND TARIFF HITS A NEW LOW

In the second auction conducted by SECI for 1 GW wind capacity on 4th October, the wind tariff reached an all time low of Rs 2.64 per unit. This tariff was quoted by ReNew Power for 250 MW capacity. This is the lowest wind energy tariff determined in the country after the wind auction conducted by TANGEDCO where a price of Rs 3.42 was determined. The following graph determines the decrease in wind tariffs determined through reverse bidding in 2017:


Article covering the same can be accessed here.

 

 

Solar Power Tariff hits new low

The solar power tariffs has hit a new low.  In a Solar Energy Corporation of India’s auction of rooftop solar power projects, Gurgaon-based Amplus Energy Solutions quoted a tariff of Rs. 3 /unit defeating the previous low of Rs 4 /unit for a solar park in Rajasthan by a quarter. The rooftop projects will be installed on buildings of NGOs, educational institutes, hospitals, trusts and notfor-profit companies in these states.

The lowest tariff quote for these projects is same as average tariff offered by state-run generation utility NTPC for power from its coal-fired plants and nearly half of tariffs charged by some private power producers.

Till now, a solar project at Badhla in Rajasthan held the record for the lowest tariff at Rs 4 per unit in the solar park category. The lowest tariff before that was Rs 4.34 per unit, quoted by Fortum India in January .

MNRE scheme for Development of Solar Zones in the country commencing from 2016-17 and onwards

MNRE has recently sanctioned the scheme for setting up of 10 solar zones. Each solar zone will be having around 10,000 hectares of government owned or privately owned wasteland, uncultivable land or fallow land in one or more than one patches. An estimated amount of Rs. 4400 crore has been granted as a Central Financial Assistance for this project.

Following are some of the highlights of the scheme:

  • The objective of the scheme is to promoted developers and investors and thereby helping the country in achieving the target of 100000MW by 2022.
  • This scheme will in return help the states in meeting its mandate RPO, and also provide employment opportunities to the location.
  • All the states and Union Territories will be eligible for benefiting under this scheme.
  • The solar zones will be developed in collaboration with the State Government and their agencies. SECI will act as MNRE’s agency for handling the scheme.
  • The state government shall identify an area having daily average insulation of over 4kWh per meter square and having around 10000 hectares of government owned or privately owned wasteland.
  • The solar zones will be set up in a span of 5 years commencing from 2015-16 and the solar projects may come in as per demand and interest shown by the developers.
  • Out of the total solar potential in the solar zone, 25% area will be set apart for deployment of manufactures of ingots, water, solar cell and modules to promote make in India.
  • 25% area for small and medium enterprises, farmers and unemployed youth and 50% for solar project developers.

The scheme can be accessed here.

MNRE Scheme for setting up of 1000 MW CTU-connected Wind Power Projects

The Ministry of New and Renewable Energy recently sanctioned the scheme for setting up of 1000MW CTU- connected Wind Power Projects by Wind Project Developers on build, own and operate basis. However, the capacity may go higher than 1000 MW, if there is higher demand from Discoms of non-windy States.

The Government of India has set an ambitious target of target of achieving 175 GW power capacity from renewable energy resources by 2022 and out of this 60 GW to come from wind power.

In order to facilitate transmission of wind power from these windy States to non-windy States provisions have been made in the Tariff Policy to waive the inter-state transmission charges and losses for wind power projects.

Some of the important highlights are:

  • The selection of wind power projects under the Scheme will be through a transparent e-bidding process followed by e-reverse auction for eligible bidders for procurement of wind power at tariff discovered through open competitive bidding process. SECI will develop guidelines for e-bidding process.
  • MNRE will play an important role by issuing Guidelines for transparent bidding process for implementation of the Scheme.
  • SECI will develop a suitable mechanism for monitoring the performance of the projects and will act as the nodal agency for implementation of this Scheme.
  • The objective of the scheme includes:
    • To facilitate supply of wind power to the non-windy states at a price discovered through transparent bidding process;
    • To encourage competitiveness through scaling up of project sizes and introduction of efficient and transparent e-bidding and e-auctioning processes
    • To facilitate fulfillment of Non Solar Renewable Purchase Obligation (RPO) requirement of non-windy states.

The full article can be accessed here.

Orissa to Set up 1000MW Solar Power Park

The Orissa government plans to add aggregate clean energy capacity of 1,000 MW by establishing solar parks in the state by 2020. The target, fixed by the state government in its draft Orissa Solar Park Policy, 2014, primarily aims at facilitating accelerated deployment of solar energy in the state to support sustainable development and address the climate change issues.

The state government had set an ambitious target of adding 3,000 Mw of renewable energy capacity by 2022 in the draft policy. The park has been approved by Ministry of New and Renewable Energy which will likely involve investment of about Rs 6,500 crores.

A total of 5000 acres of land would be required for setting up of the solar park. Since it’s difficult to find this stretch of land in Orissa, the park would be developed in three to four Green Energy Development Corporation of Orissa Ltd (Gedcol) will be signing a pact with Solar Energy Corporation of India clusters, where Gedcol will act as the nodal agency.

The above update has been taken from Business Standard’s article published on 17th October, 2015 which can be accessed here.

MNRE Releases Draft Guidelines for 3000 MW Solar Under JNNSM

Ministry of New and Renewable Energy (MNRE) has recently released the draft guidelines for selection of 3000 MW grid connected Solar PV Power Projects under Phase-II, Batch-II & tranche-I of JNNSM.

Under Part-I of Tranche-I, 1000 MW Solar PV Projects would come up in the Solar Park to be developed by the Joint Venture company of SECI, NEDCAP & APGENCO at Kurnool district in Andhra Pradesh.

The key points proposed in the draft are as below:

  1. The Scheme will be implemented by NVVN.
  2. The selection of Grid Connected Solar PV Projects of 1000 MW will be carried out by NVVN through a transparent tariff based bidding process.
  3. The generated power from developer will be purchased by NVVN and sold to AP distribution companies.
  4. To connect the projects to the transmission utility substations at 132kV and above, the Project capacity should be 50 MW.
  5. The maximum capacity to be allocated to a company or its group companies should be limited to a total of 250 MW.
  6. Out of total 1000 MW Under this scheme a capacity of 250 MW will come under Domestic Content Requirement (DCR).
  7. Keeping the slow-moving REC market in mind, it has been proposed that the NVVN will purchase 1 (One) Non- Solar REC (or proportionate Solar REC so as to match expenditure on non-Solar REC) for every 40,000 Units of bundled power purchased. The power sold to DISCOMs will cost them an extra Rs. 0.05/Unit, which is quite insignificant.
  8. The 1000 MW purchased by NVVN, will be bundled with 500 MW thermal power from NTPC.

 Time Schedule for Solar PV Projects:  Selection of Solar PV Projects shall be carried out according to the timeline given below:

The total bundled power of 1500 MW purchased, will result in injection of approximately 2250-2300 million units. As a result, NVVN will buy 56000-57500 REC per annum, which is insignificant compared to current inventory of 10.5 million RECs.

The relevant order can be accessed here.

Our previous Blog on MNRE JNNSM Phase-2 Batch-2 Scheme can be read here.

Contributed by Dheeraj Babariya.

JNNSM Phase 2 Batch 1 bid results

We thank solar industry expert – Mr. Gopal Lal Somani, who has graciously provided his inputs and comments on the results of bidding process. 

The MNRE had authorized Solar Energy Corporation of India (SECI) to implement NSM Phase 2 program. In light of this, SECI auctioned 750 MW of solar energy projects and announced the financial bid results on 21st February 2014. In the subsequent paragraphs, we have covered these results in detail.

A total of 68 bids were received from 58 developers, covering 122 projects with a cumulative capacity of 2,170 MW. Of this, 36 projects with a capacity of 700 MW opted to bid under the Domestic Content Requirement (DCR) part A of the bidding process and the remaining 86 projects with a capacity of 1,470 MW opted for the open category Part B. Each part eventually got allocated an equal 375 MW capacity projects. Bids by PMP Auto Components, Zandu Realty, Golden Crystal and Green Energy Wind were cancelled as they did not meet the techno-commercial criteria. The bid by Moser Baer was cancelled as they could not provide bank guarantee.

Figure 1 : Total projects & cumulative capacity that participated in bidding of JNNSM Phase 2 Batch 1.

The financial bids followed a technical qualification round. Developers competed in the reverse-bid auction in two parts. Half the 750MW available had a mandatory domestic content requirement (DCR), and the other 375MW was left open with no domestic requirement.

The US filed a complaint to the World Trade Organisation earlier this month claiming that it should have equal access to the procurement round. First Solar had dominated the thin film market in Phase I Batch 1 & 2; courtesy a loop hole in previous JNNSM bids. The company which worked with the US Export-Import Bank on a number of projects, missed out its share in this bidding cycle. India in reply to allegations from US said – that First Solar had missed out “only based on the bid submitted by them. There are no political considerations. India cannot be blamed to be investment unfriendly”.

The reverse bid mechanism included bids for viable gap funding (VGF), a government capital subsidy to provide up to 30% of JNNSM project costs subject to maximum Rs. 250 lac / MW. There is a cap of up to 50MW per developer for funding applications.

The lowest bid under the DCR was for INR 13.5 million (US$0.2 million) by Swelect for 10MW and highest bid has been INR24.9 million (US$0.4 million) by IL&FS Renewables also for 10MW. Under the DCR, another 15 PPAs are to be signed for 21 projects, totalling 375MW.The lowest and highest VGF sought for projects outside the DCR were INR 1.7 million by Gujarat Power Corporation Limited (10 MW) and INR 24.9 million by Madhav Infra (10 MW) respectively. The highest bid under the non-DCR category is INR 24.5m (USD 0.4m) by Tata Power Solar. Under the non-DCR category, 15 project developers will be invited to sign power purchase agreements (PPAs) for 24 projects totalling 375 MW. Part A with the DCR oversubscribed twice whereas the non-DCR (open) part B four times over. The entire capacity of 750 MW will be converted into Letters of Intent (LOI) likely to be confirmed to respective winning bidders by end of February.

Figure 2 : Maximum-Minimum VGF sought in JNNSM Phase 2 Batch 1.

Average VGF (DCR) – 22.14 million INR, Average VGF (non-DCR) – 15.7 million INR

The average project size per developer would be around 25 MW and top solar potential states i.e. Gujarat and Rajasthan are the most preferred locations opted by most developers for implementation.

VGF payments are estimated for non-DCR projects to cost INR 97 billion (US$1.5 billion), whereas the DCR bids are estimated to cost much more at INR 160 billion (US$2.5 billion).

The difference in government funding of INR 63 billion (US$1 billion), has sparked questions from solar industry analysts who are of the view that this funding should have been extended as direct funding to encourage domestic manufacturing instead.

It is speculated that some of the winning firms who made aggressive bid would not sign the PPA and therefore the figures will not be final until PPAs are signed, which is expected to happen by March/April 2014.

21st February 2014 was a momentous day for solar in India as financial bids were opened at SECI.

It may also be noted that the tariff for the NSM Phase II batch I projects were fixed at Rs. 5.45/kWh while the bids were called for Viability Gap Funding (VGF) required by the developer.

Bidders enthusiasm and aggression in bidding perfectly matched with NSM Phase I Batch 1 and 2 success stories. This he infers is due to declining cost trends in EPC cost, more reliable players in the market, lenders confidence in funding on higher efficiencies/output, improved performance, improvised O&M (evidently observed in Phase I projects) and bankable PPA with SECI.

The lowest bid for VGF has been made by GPCL (Gujarat Power Corporation Ltd), a Gujarat State company; also the promoters of Gujarat Charanka Solar Park. This was the first solar park in the country with more than 500MW installed capacity. The VGF bid by GPCL was a jaw-dropping Rs. 17.5 lakhs/MW in the non-DCR category. The next bid in the non-DCR category was Rs. 73.29 lac /MW by Sun-Edison, a US based developer.

Amongst wide variance in bidding amounts from various bidders in Part A and Part B, there were some bids in Part A which matched with those of Part B, which is an indication that VGF can now be capped at INR 135 Lac/MW and going forward paves the way for subsequent bidding cycles conducted for entire capacities under VGF as it creates more jobs and thrives economic development of India.

This will also allow large scale solar energy deployment and boost local solar industry for sustainable development.   The success of this bidding has reconfirmed the interest of investors in solar projects and is a big booster from crawling solar market.

The heavy VGF discounting seen in Part A and Part B is almost unbelievable but allows Solar Power emerge  as a clear winner.

“Achieving status of financial closure by all winning bidders would be a world class result ever seen elsewhere in emerging markets.”

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For a brief profile of Mr. Somani please visit page 4 of our NL Vol. 39

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