Kerala State Electricity Board (KSEB) issued a Request for Selection (RFS) for allocating 200 MW of ground-mounted, grid connected solar PV power on 17th February 2016. This is the first large scale RFS issued by KSEB for consumer use. So far, Kerala has only 13 MW of installed solar capacity, most of which (12 MW) is deployed onsite at the Kochi International Airport.
Salient features of the tender:
- Projects will be allocated through a tariff based competitive bidding process
- Size of each project is specified as between 10-200 MW (no upper limit)
- Benchmark tariff, the highest that a developer can bid, is INR 7.04/kWh
- Time allowed for commissioning is 24 months from the date of signing of the PPA
- Developers are required to identify and acquire land on their own
Financial qualifications for the developers is specified as net worth greater than or equal to INR 35 million per MW. This will be very restrictive for small developers in particular. Most tenders have a net worth criterion of typically between INR 10 – 15 million/MW. Other financial conditions in the tender are also relatively onerous:
- Bid bond of INR 2 million per MW (INR 1 million/MW in Telangana and Andhra Pradesh)
- Performance guarantee of INR 7.5 million per MW (INR 2 – 2.5 million per MW)
These conditions will result in higher bid costs for developers. Similarly, Kerala being a relatively small and fertile state, land acquisition will be more challenging and costly in comparison to other states.
However, the tender does provide some benefit in terms of timelines. While most tenders offer 13-18 months for commissioning, this tender offers 24 months, which makes it easier for the developers.
Overall, this tender shows that the smaller states are beginning to move towards greater adoption of solar power. We expect good response from the developer community but tariffs are expected to be higher in comparison to recent tenders because of more onerous bidding conditions.