Bridge India

Subdued bid interest for SECI’s 500 MW tender in Maharashtra

Earlier this month, bids were submitted to Solar Energy Corporation of India (SECI) for 500 MW of solar PV projects in Maharashtra under Viability Gap Funding (VGF) mechanism. Out of the total capacity under this tender, 50 MW of projects are reserved for modules meeting domestic content requirement (DCR). Key highlights of this tender are – minimum project size of 10 MW, no maximum limit, land to be procured by developers, fixed tariff of INR 4.43/kWh and VGF of up to INR 10 million/MW (INR 13.1 million/MW for DCR category) payable in 6 instalments (50% on project COD, followed by 5 annual instalments of 10% each). Bidders will be allocated projects on the basis of most competitive VGF quotes.

The tender has received bids from 14 developers for total capacity of less than 1.8 GW in contrast to NTPC’s recent 500 MW tender in Andhra Pradesh which received bids aggregating 5.5 GW from 30 bidders.

  • MNRE reduced the fixed tariff drastically from INR 5.43/kWh (plus an annual escalation of INR 0.05/kWh for 20 years) in earlier VGF rounds taking note of recent bids of INR 4.63/kWh in Andhra Pradesh just 10 days before bid submission;
  • Bid response is highly subdued as compared to recent allocations by NTPC and some states;
  • We expect similar muted response for SECI’s three upcoming tenders in Uttar Pradesh, Gujarat and Andhra Pradesh.

Figure 1: Bid response in recently concluded tenders


We believe that the SECI tender has two key differences in comparison to other recent tenders, which are likely to result in higher tariff (or VGF) expectations for developers. As these projects will be implemented outside government solar parks, land acquisition will be a challenge for developers particularly for large project sizes. As contiguous land is unlikely to be available in large sizes, developers will not benefit from economies of scale. Secondly, the market’s higher risk perception of SECI as an off-taker in comparison to NTPC is also likely to have an upward impact on the bids. Finally, we believe that the recent hardening of module prices and INR depreciation against the USD may also have a similar upward impact on the bids.

SECI has issued 3 other tenders for projects in Gujarat (250 MW), Uttar Pradesh (440 MW) and Andhra Pradesh (500 MW) respectively under VGF route. Bids are expected to be received for these tenders over the next two months. We expect similar muted response for all three tenders for various reasons including smaller project sizes, low radiation (Uttar Pradesh), high solar park charges (Gujarat).


  • We all agree that the goVt is trying to get power at lower tariff, but manner in which this case was handled was really unexpected from the GOvt. to first give a tariff of Rs. 5.43 with escalation. then kept on post ponding final dates for more 3 months and then roll it to Rs 4.43 that too without escalation. this rate was lower then the lowest bid reached so far.
    this sends out a very wrong signal to the investors.

  • it all started with some companies desire to create a monopoly and entry barrier for new entrants.
    When the cost of solar power has achieved grid parity, there is a need to go for FEED IN TARIFF regime like in EU and concentrate on indigenous production/ domestic industry and capacity building.
    Today we have uncertified installers and O & M personnel though there are MTech & Ph.D. programs.
    We have the uncertified personnel, mostly from telecom moonlighting as installers and O & M personnel though they might be having the basic technical qualification.