Developers raise serious concerns at the Tamil Nadu Solar Policy pre-bid meeting

Developers raise serious concerns at the Tamil Nadu Solar Policy pre-bid meeting

Mr. Mohit Anand heads the Market Intelligence team as Senior Consultant at BRIDGE TO INDIA.

The Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) held a pre-bid meeting on December 19th 2013 for potential bidders under the Tamil Nadu State Solar Policy.

  • The deadline for submitting the bid is January 4th 2013, which is too short, especially for international developers
  • Unavailability of a draft PPA is a major concern for developers. TANGEDCO promised to provide one ‘soon’
  • Projects under the Tamil Nadu Solar Policy have no domestic content requirement

The meeting was for the allocation of 1,000 MW of solar projects in the state through a competitive bidding process. It was attended by more than 400 participants from interested developers across the country and government officials from Tamil Nadu Energy Development Agency (TEDA), Tamil Nadu Electricity Board (TNEB), TANGEDCO and Tamil Nadu Transmission Corporation Ltd (TANTRANSCO).

The key outcomes of the meeting were:

  1. Time availability for submitting the bids: The last date of bid-submission is January 4th 2013. Most of the participants felt that the timeframe is too short. Especially for international bidders, it will be difficult to submit the bids on time as most of the companies will remain closed due to seasonal holidays. There was also a concern over the submission of documentary evidence of land ownership within 30 days from receiving a Letter of Intent (LoI). The timeframe is not likely to be revised. The timeline is likely to keep most international developers out of the bidding process.
  2. Although the bidders raised questions over evacuation and transmission facilities, the chairman of TANGEDCO and TANTRASCO provided an ‘unconditional commitment’ to make the necessary arrangements to provide a strong evacuation infrastructure. It remains to be seen if this commitment will translate to ground realities in an appropriate time-frame.
  3. A document of the substation-wise evacuation facilities of each district was provided to all the attendees to help potential bidders understand the available capacity (Refer). The board officials promised that the availability, allocations, evacuation and transmission will be the responsibility of TANTRANSCO. The mechanism of allocating the available capacity among the selected potential bidders is yet to be clarified.
  4. Unavailability of a draft PPA was another issue raised by the participants. TANGEDCO promised that it will release the draft on its website “within a few days”.
  5. TANGEDCO made it clear that there will be no domestic content requirement.
  6. As the solar policy does not include Capacity Utilization Factor (CUF) requirements, participants requested the government to clarify whether any such requirements would be incorporated. This issue was taken into account and officials said that it will be announced soon if there should be any CUF requirements.
  7. Earnest Money Deposit (EMD) will be refunded if the potential bidders don’t accept the proposed FiT by the government. According to BRIDGE TO INDIA’s financial model, tariffs could fall to INR 6.2/kWh which may not be acceptable by most of the developers (refer).

Overall, the pre-bid meeting gave a mixed impression. No domestic content requirement, minimum financial criteria (INR 1 crore/MW net worth) and availability of good infrastructure for power evacuation and transmission were positive aspects for the developers. However, unavailability of a benchmark tariff, no support with land procurement, no deemed generation, 20 years PPA instead of 25 years and stringent timelines remained the concerns for potential developers.

The Tamil Nadu government announced its ambitious solar energy policy in October 2012. The policy targets 3,000 MW of capacity addition by 2015. For more information download our free Tamil Nadu Solar Policy Brief.

In addition, download our latest INDIA SOLAR DECISON BRIEF, The Project Development Handbook, for a free overview of the processes, timelines, costs, challenges and opportunities in project development in India.

 

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