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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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Bridge India
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BRIDGE TO INDIA is the leading consultancy and knowledge services provider in the Indian renewable market. We work with all industry stakeholders including technology companies and contractors, project developers and investors, government agencies and developmental institutions. We have a unique vantage point on the market dynamics, combining the 360 degree view from our market intelligence capability with the in-depth analysis performed as part of our consulting and transaction advisory businesses. Our goal is to enable innovative cleantech solutions in India.

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Deadline for project completion under SECI’s 1,000 MW rooftop solar tender for installation on public sector sites is coming up at the end of June 2018. The tender was issued back in December 2016. Because of various problems in the tendering process, final allocation was made for 410 MW only in…

Earlier this month, Karnataka Electricity Regulatory Commission (KERC), the state power regulator, issued an order notifying various open access charges for renewable projects. The regulator has withdrawn all open access incentives for solar projects. But some incentives would continue to be…

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

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India Solar Navigator is a comprehensive, real-time, online database of government policies, tenders, projects and market players. The database covers both utility scale and rooftop solar markets.

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