Bridge India

Punjab opens bids for phase two of the state allocations

Punjab had floated a tender in December 2014 (refer) for the second phase of allocations in the state for 250 MW of solar PV projects. The state received eligible bids for over 300 MW (our estimate 344 MW) but details have not yet been officially released. Projects were divided in three categories: category one was for a total of 50 MW with project sizes between 1 MW and 4 MW, category two was for 100 MW with project sizes between 5 MW and 24 MW and category three was for 100 MW with project sizes between 25 MW and 100 MW.

  • Despite severe land constraints in Punjab, developers prefer larger projects with comparatively lower transaction costs and more options for financial engineering
  • Among the prominent developers that have participated in the bidding were Solairedirect, Acme, Azure and Welspun
  • Post the Punjab allocations, new state level allocations are now expected only in Uttar Pradesh and Tamil Nadu

Based on unconfirmed information, the category one (for smaller projects) has been undersubscribed with eligible bids being received for less than 35 MW, category two (for mid-sized projects) has received bids for a little more than the available 100 MW and category three (for large projects) has been twice oversubscribed. Even in the second category of projects, almost all bids have been for 24 MW of capacity, i.e. the maximum possible allocation under that category. Despite severe land constraints in the state, this result underlines the trend that developers prefer larger projects with comparatively lower transaction costs and more options for financial engineering.

Among the prominent developers that have participated in the bidding were Solairedirect, Acme, Azure and Welspun. Interestingly, Punj Lloyd, which has not participated in other bids in the country after its early project under batch one of phase one of the NSM, has made a comeback. RattanIndia Power (formerly known as Indiabulls Power) also participated in the process (RattanIndia Power has also recently launched a rooftop solar subsidiary called “Apna Solar”). The lowest bid of INR 6.88/kWh (USD 0.11/kWh) has been submitted by Solairedirect for a 24 MW project under category two and a 30 MW project under category three.

In the six months preceding the allocations in Punjab, the states of Telangana, Andhra Pradesh and Karnataka had already allocated projects. With the closure of the Punjab allocations, new state level allocations are now expected only in Uttar Pradesh and Tamil Nadu. 2015 is likely to be dominated by central government allocations as states will likely take a back seat for most of this year.

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