Bridge India

Indian corporates assert themselves as bidding intensity comes down

Results were announced last week for 1,050 MW of projects tendered by Solar Energy Corporation of India (SECI) in Karnataka (950 MW) and Chhattisgarh (100 MW) under the Viability Gap Funding (VGF) scheme. These projects will be set up outside solar parks and will have no module sourcing restrictions. Adani (350 MW), Hero Future Energies (200 MW), Energon (100 MW), Acme Solar (160 MW) and Solar Arise (30 MW) are the big winners in Karnataka with Adani winning the entire 100 MW capacity available in Chhattisgarh.

  • Recent tenders show that level of oversubscription and/or bidding intensity has come down markedly over the last 6 months
  • While international developers have won a majority (58%) of NTPC projects, 62% of SECI pipeline and 51% of state policy pipeline has been allocated to Indian corporates
  • As many of the leading developers get occupied with execution and/or capital raising, reduction in bidding intensity should provide an attractive bidding opportunity to newer players

Both tenders saw limited participation and the level of oversubscription and/or bidding intensity has come down markedly over the last 6 months. With an extraordinary 12 GW of projects in pipeline where tender process has already been completed, developers appear to be getting more selective and disciplined in their bids. The winning VGF in Karnataka is in the range of INR 6.8m/MW to INR 7.35m/MW and the Chhattisgarh project has been won at a VGF of INR 5.9m/MW. These levels are considerably higher in comparison to VGF quoted recently in Andhra Pradesh in May 2016 where the lowest VGF was INR 4.45m/MW. However, it is interesting to note that Hero Future Energies and Adani submitted more aggressive bids in Karnataka and Chhattisgarh tenders respectively with other bidders refusing to match their levels.

The other key trend we see is that with NTPC coming close to completing its target of 3,000 MW of project allocations, the Indian corporate houses are playing a leading role in the sector. Both tenders were dominated by Indian developers. Adani has been a dark horse in the sector. It entered the market only about a year back but is now on track to build a portfolio of 1.2 GW, amongst one of the highest in the country. In contrast, many of the large international developers, interested primarily in NTPC tenders, are relatively quiet.

Our analysis shows that Indian corporates are leading the charge in SECI and state tenders particularly where there is no solar park availability. They are understandably more willing to take higher offtake and development risk. While international developers have won a majority (58%) of NTPC projects, Indian corporates have won the majority of SECI pipeline (62%) and state policy pipeline (51%).

SECI is expected to announce new tenders in Andhra Pradesh and Maharashtra very shortly. As many of the leading developers get occupied with execution and/or capital raising, reduction in bidding intensity should provide an attractive bidding opportunity to newer players.

In other sector news, capital raising seems high on the agenda of many developers. Welspun has just agreed to sell its 990 MW portfolio to Tata Power again affirming the growing appetite of Indian corporate houses in the sector. Meanwhile, Azure and ReNew Power are busy with preparations for IPO.

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