Bridge India

Gujarat government has cancelled the 500-MW state tender, for which an auction was held just four weeks ago. Capacity was won in this tender by Kalthia Engineering (50 MW), Gujarat State Electricity Corporation (150 MW), Acme (100 MW) and Azure Power (200 MW). Reason for cancellation has been cited as winning tariffs, between INR 2.98 – 3.06/kWh, being “on the higher side”.  In the same week, the state cancelled another tender for short-term purchase of 2,000 MW of conventional power again because the prices (INR 4.97/kWh-INR 8.00/kWh) were deemed to be too high.

 

A solar power plant rarely produces nameplate capacity power as solar modules operate at their maximum efficiency only during limited peak hours. It has therefore become routine industry practice to over-size DC module capacity, a concept commonly known as DC overloading. It allows solar plants to increase generation during non-peak hours and optimizes overall performance. In 2017, 45% of the...
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SECI conducted another e-auction for 2,000 MW of wind power projects on 6 April 2018. Winning bids were INR 2.51 – 2.52/kWh, just marginally higher than the tariffs discovered in the previous 2,000 MW SECI auction (2.44 – 2.45) held in February 2018. Winning bidders include an even spread of international and Indian names. International winners include Continuum (250 MW),...
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About two weeks ago, the Central Electricity Authority (CEA), a statutory agency constituted under the Ministry of Power, released final National Electricity Plan for the five-year period beginning April 2017. The Plan is an important document – it should provide a roadmap for power sector development and serve as a planning guide for all government agencies. Unfortunately, unrealistic assumptions about power demand growth and RE capacity addition as well as some fundamental exclusions render the exercise futile in our opinion.

Last week, MNRE issued a clarification to its guidelines for competitive bidding of solar PV projects. The clarification allows inclusion of changes in duties and other cesses in Change in Law provisions in power purchase agreements. It effectively means that risk of any new duties or changes in duties including safeguard and/or anti-dumping duties arising after the “last date of bid submission” would be borne by the power purchasers ie DISCOMs.

  • The protection offered to developers is highly welcome even if it poses some operational challenges and doesn’t eliminate the risk entirely;
  • It paves way for the tender pipeline, stuck for many months, to start moving forward;
  • The status of projects auctioned without any explicit protection remains unclear;

Gujarat conducted e-auction for a 500 MW utility scale PV solar tender last week. Capacity has been won by four developers at tariffs between INR 2.98 – 3.06/ kWh – Kalthia Engineering (50 MW, INR 2.98), Gujarat State Electricity Corporation (GSEC) (150 MW, INR 3.00), Acme (100 MW, INR 3.06) and Azure (200 MW, INR 3.06). Losing bidders include Hero, Adani, Shapoorji Pallonji, Mahindra, Mytrah and Fortum.

  • Tariffs have gone up by 22% in 3 months because of the threat of safeguard duty;
  • Ministry of Power statement that developers would be expected to bear duties only as applicable on the date of auctions is being disregarded by them;
  • We expect little progress on over 11,700 MW of tenders stuck in pipeline until there is clarity on duty decision;
Uttar Pradesh (UP) has recently amended the Captive and Renewable Energy Regulations 2014 to provide 50% exemptions from transmission and wheeling charges for intra-state open access sale of solar power. The state agencies have been reluctant to provide OA approvals in the past. There is virtually no OA solar capacity in the state. But this amendment, in line with the state...
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MNRE’s proposed quality testing and standards regime is facing a difficult take-off. Policy ambiguity and lack of testing infrastructure have already led to multiple revisions in implementation timetable.

  • The Indian RE sector has a major quality problem and MNRE intervention, long overdue, is highly welcome;
  • The policy needs to be backed up with urgent investments in testing infrastructure;
  • MNRE needs to work actively with the industry to finetune the policy and define a clear, time-bound implementation roadmap to address concerns;