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INDIA RE CEO SURVEY | May 2018

The survey provides insights into the minds of industry leaders – where they see growth opportunities, challenges, assessment of key states etc.

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NTPC, SECI and Maharashtra State Electricity Distribution Company Limited (MSEDCL) completed auctions for their 750 MW, 200 MW and 1,000 MW tenders respectively in last two weeks. The NTPC and SECI projects would be located in Anantapur solar park, Andhra Pradesh and Pavagada solar park, Karnataka respectively. There is no solar park availability for the MSEDCL tender.

Capacity has been won by following developers:

– NTPC tender: Sprng (250 MW, INR 2.72), Ayana Renewables (250 MW, INR 2.73) and SoftBank (250 MW, INR 2.73);
– SECI tender: SoftBank (200 MW, INR 2.82);
– MSEDCL tender: Technique solar (20 MW, INR 2.71), Adani (200 MW, INR 2.71), ReNew and ACME (250 MW each, INR 2.72), Tata (150 MW, INR 2.71) and Azure (130 MW, INR 2.72);

The difference between profiles of winning bidders in the three tenders is pretty stark. Successful winners in the NTPC and SECI tenders are large international developers, who tend to be more risk averse particularly on offtake and land acquisition aspects. In contrast, winners in the MSEDCL auction are predominantly Indian developers.

After factoring in solar park costs (NPV of INR 9.8 million and 8.8 million/ MW for Andhra Pradesh and Karnataka solar parks respectively), bids under NTPC and SECI tenders are extremely aggressive as per our calculations. It is clear that the international bidders are paying a substantial premium for their risk aversion.

MSEDCL is one of the healthier DISCOMs (A rated) in the country but its record on renewable energy has been mixed with multiple incidents of payment delays and PPA execution delays. Despite that, the tender was oversubscribed by 45% and the winning tariffs are also fairly aggressive in our view. It is notable that the Maharashtra tender had to be re-issued for the fifth time. It failed to attract sufficient interest previously due to missing change in law protection from safeguard/ anti-dumping duty risk. But after the clause was added, the tender saw strong bidder interest.

By our calculations, risk-adjusted equity IRR for all these tenders is barely in double digits, way below the return hurdle for the sector. More than 10 GW of tenders are pending allocation but 7 GW of this capacity is stuck due to intra-state transmission system connectivity concerns. Developers, keen to add to their business pipeline now, appear willing to accept growing execution challenges and ignore soaring tender promises of MNRE.

FULL STORY

MNRE released the final version of National Wind-Solar Hybrid Policy last week. The policy aims to “provide a framework for promotion of large grid connected wind-solar PV hybrid systems for optimal and efficient utilization of transmission infrastructure and land, reducing the variability in renewable power generation and achieving better grid stability.” A major change from the draft policy is…

Central Electricity Regulatory Commission (CERC), India’s chief power sector regulator, recently issued a draft procedure for applying for connectivity to the inter-state transmission system (ISTS). The draft procedure comes in the wake of last year’s CERC order on transmission connectivity ‘squatting’ and seeks to provide much needed clarity for ISTS connectivity for RE projects.

National Institute of Wind Energy (NIWE), an autonomous technical institution set up by MNRE, has invited Expressions of Interest (EOI) for India’s first offshore wind project. The 1,000 MW project is proposed to be located about 25 km from Pipavav port off the coast of Gujarat. Transmission infrastructure for sub-sea connectivity shall be the responsibility of project developer(s). Due date for submission of EOI is 25 May 2018.

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