The Tamil Nadu Generation and Distribution Corporation is set to start negotiations with potential solar power generators who have bid to enter into long term power purchase agreements with it.

The utility had called for bids from investors to establish over 1,000 MW of solar power generation capacity across the State.

Over 90 bidders had submitted bids to set up about 500 MW of solar power generation capacity. On January 30 Tangedco opened the price bids. The lowest tariff quoted was Rs 5.97 a unit.

Officials had then said a viable tariff would be assessed, formally approved by the utility and individual negotiations initiated with the bidders to match that price.

According to sources in the know, the negotiation is expected to start from tomorrow and Tangedco hopes to finalise the process over the next one week.

According to industry sources, the low bid had caught bidders by surprise. The preferential tariff under the Jawaharlal Nehru National Solar Mission is now at about Rs 7.49 a unit.

According to officials, Tangedco hopes to put in place adequate solar power generation capacity by January 2014 to cater to the Solar Purchase Obligation of high tension and commercial power consumers who have to meet 6 per cent of their power requirement from solar power generation.

Tangedco has estimated that about 1,000 MW of solar power generation will be needed to meet the purchase obligation as outlined in the Solar Energy Policy announced by the State Government.

Tangedco will enter into 20-year power purchase agreements with successful bidders who meet the tariff to be fixed based on the bids. There will be a 5 per cent annual escalation provided up to the 10{+t}{+h} year on the first year’s tariff.

The tenth year tariff will continue till the end of 20-year agreement, according to conditions spelt out in the bid process.

balaji.ar@thehindu.co.in

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