Bridge India

Solar tenders like Indian rail — you can almost bet on delays

The recent National Solar Mission (NSM) tenders have been delayed multiple times before and are again delayed now. This pattern of delays is not new.

  • Only one of the 30 odd bids in India has gone through without significant extensions or delays
  • Main culprits are process delays by implementation agencies and requests for time extension from developers – these delays affect sector development as many players, particularly the new entrants are not conditioned to respond to the way business is carried out in India
  • MNRE should play a key role in streamlining the somewhat disorganized tender process so as to improve the ‘ease of doing business’

Out of the approximately 30 solar tenders so far in India, only one has been submitted on the original date mentioned in the bid document – this was the 500 MW tender in Karnataka in June 2014. Other than this, most bids have been delayed by a few months. A bid for a 50 MW tender in Haryana was delayed by as much as five months.

Another cause for concern for the new NSM tenders is the decreasing accessibility under the online tendering process. Earlier, all new tenders were announced in the newspapers, on Ministry of New and Renewable Energy’s (MNRE) website and on the website of the tendering authority like NTPC Vidyut Vyapar Nigam Limited (NVVN) or Solar Energy Corporation of India (SECI). The openly available tenders allowed the media and the market to scrutinize and publicize them for the global audience. Under the new NSM bids released by National Thermal Power Corporation (NTPC), the announcements and the bid documents are only available on a paid portal. This paid portal and its somewhat complicated access procedures are an unnecessary hassle for developers.

With the floodgates on solar capacity allocations now open in India, there is an urgent need to streamline processes. By improving their internal planning and providing advance notice of (more realistic) bidding timelines, the tendering authorities can provide better transparency to the market and minimize delays. MNRE should also focus on improving the ‘ease of doing business’ by for example, developing a special online portal for launching all central and state solar project tenders in one place and possibly, spreading the tenders evenly over time.

We expect such measures to boost confidence in the sector and improve participation particularly from the international developers.

3 comments

  • The best way to eliminate the tender process is to declare the tariff valid for 6 months and let MNRE declare the capacity of 500 MW per month in such a way that bidder has to select the Discom and a taluka place of a state. Let all the 4500 taluka places of India be selected with an average capacity of 15 MW, thus every month 30 taluka project development opportunity. Let all these be under NSM scheme with an understanding with Discom of such taluka as part of support from center to Discom as part of revival of health of Discom i.e under new sharing formula as per finance commission, the extra amount being shared by center be adjusted from this as part of revival of Discom, if it buys such energy through such NSM allotment. Hence no question of reverse bidding nor dumping or unrealistic prices. In the bid as per the valid tariff with control period of only 6 months with a max of 10% discount on tariff suggested by MNRE shall be the winner.. this tariff shall be uniform across all the states, let the capacity of 500 MW be exhausted per month. In the bid the bidder must show the ownership of land, investment availability and a letter from Discom to ensure its jurisdiction. No two projects shall be in one taluka as we need to develop all the taluka places and also create jobs in each taluka place. Based on the interest shown, Mnre can open 800 to 1000 mw per month. Parallelly, the state governments can also release such capacities without waiting for election to make election funds, hence, abolish capital subsidy, viability gap funding with immediate effect. Since the capacity release is only 15 to 20 MW per taluka, availability of land of 100 acres/ taluka is not a challenge. If a bidder is interested to do agriculture below the PV panels to support poor farmers with contract farming, the tariff shall be 50paise more than the stated tariff, thus, every taluka will have day energy by using the existing grids, hence, Govt need not spend on grid strengthening. To promote rural entrepreneurs, a debt fund of 100% can be sanctioned by nabard, if the rural entrepreneur ensures agriculture below the pv panels. Thus, no wastage of land below the pv panels. Hence, no delay in tendering and capacity addition without waiting for election funding or government or babu change based bidding norms which is delaying the tendering due to such vested interest.

  • The approach appears to be to somehow increase the MW capacity.
    MNRE has issued circular (d.o.no03/09/2014-15/gcrt dt 10th august, 2015) for grid connected solar on all govt./public places. it is desirable that this is given special attention which gives direct results, than perhaps big capacity projects by private parties unless the problems with discoms are fully analysed and settled.
    If the private parties wants mw capacity for their captive loads, i think there are no hurdles. national interest should outweigh target oriented approach.

  • unless the reforms undertaken in generation sector are adequately matched/backed up by reforms required to be taken under transmission & distribution sector, power industry prospects for business look discouraging in India. Time to think about universal open access / mandatory RE generation / one market not multiple different state markets.