Economy

Solar projects: Developers appeal to UP Govt not to cancel bids post auction

ksenia kondratieva Mumbai | Updated on July 16, 2018

The National Solar Energy Federation of India (NSEFI), representing solar energy developers, has requested the Energy Minster of Uttar Pradesh to intervene and stop the possible cancelling of 1000-MW solar PV auction conducted last week by the Uttar Pradesh New and Renewable Energy Development Agency (Upneda).

The reverse auction for grid-connected solar projects conducted on July 10, saw participation from 13 companies and was oversubscribed by 870 MW. However, the lowest tariff discovered at ₹3.48 per unit was much higher than in some of the recent auctions, including the latest tenders by Solar Energy Corporation of India (SECI) where the L1 bid quoted was ₹2.44 per unit.

Adani Group-promoted Mahoba Solar emerged as the lowest bidder followed by Acme Solar, Azure Power and several other companies.

Discovery of the higher tariff has prompted the government to go for rebidding, the industry sources said.

“NSEFI has apprehension that the Government of Uttar Pradesh may not honour the bidding process... even through a transparent bid process followed which saw overwhelming participation,” the association’s letter to the Energy Minister of Uttar Pradesh said. BusinessLine has seen the letter.

According to NSEFI, there should not be any comparison as tariff varies from State to State based on various bid factors. In case of Uttar Pradesh, sub-optimal rating of the UP state distribution companies (Discoms) — the power offtakers —, shorter project completion deadline, lower capacity utilisation factor (CUF) in comparison to high insolation States like Rajasthan, Gujarat, Andhra Pradesh and Karnataka, higher land costs are some of the biggest concerns.

“The fact that the projects were auctioned outside of the solar park increases the risks for developers therefore translating into higher tariffs quoted,” an industry player who participated in the tender told this newspaper.

NSEFI requested the State government to intervene and issue directives to UP Power Corporation Ltd (UPPCL) to honour the tariff discovered and not to cancel the bid as it would “set a bad precedent for other States”.

In April, Gujarat had cancelled 500 MW solar tender and this is up for rebidding in the end of this month.

“The immediate cancellation of bids post auction of the projects by state utilities, in a few cases arising largely out of higher price bids quoted by IPPs, is a negative for the growth of the sector,” Sabyasachi Majumdar, Group Head - Corporate Ratings, ICRA, said.

He said the number of projects awarded so far in the 2018 calendar year is more than double of what was awarded last year driven by clarity on change in law with regards to tariffs, favourable price movement in PV modules and relaxed timelines for project execution in the solar sector.

Published on July 16, 2018

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