bid of Rs. 4.40 ($0.065)/unit submitted
The Tamil Nadu Generation and Distribution Corporation
(TANGEDCO), which had tendered 500 MW of solar to meet its renewable purchase
obligation (RPO), has received technical bids to develop 300 MW of solar. This
is the second solar tender by TANGEDCO which is witnessing a tepid response. Previously
TANGEDCO tendered 500 MW and received bids to develop just 117 MW.
The lowest bidder quoted Rs. 4.40 ($0.065)/unit, which is Rs. 0.01 ($0.001)/unit lower
than the benchmark cost set by TANGEDCO, stated an engineer at TANGEDCO. The
engineer also stated that with the exception of a 100 MW bid (the lowest bid
received), most bids went for small project capacities.
Despite the changes
made by TANGEDCO, this tender did not live up to expectations. The TANGEDCO
had recently reduced the upper ceiling for tariffs to Rs. 4.50 ($0.067)/unit
and increased the project completion timeframe.
In the past, we have seen the TANGEDCO backing down and
asking the developers to provide new reduced tariffs. This is a factor why few developers might not
have shown interest in this auction, stated an official at Tamil Nadu
Electricity Regulatory Commission (TNERC). The state has a history of late
payments and solar curtailment.
The Tamil Nadu Electricity Regulatory Commission has a solar
renewable purchase obligation (RPO) target of 2.5 percent for the financial
year (FY) 2016-17 and 5 percent for FY 2017-18. To meet its RPO target, close
to 1,200 MW of solar power is needed in the current financial year, and
approximately 2,400 MW of solar power is required for FY 2017-18.
The state has recently joined the UDAY program, which is
expected to provide some credibility to TANGEDCO, but developers are skeptical
about TANGEDCO tenders.
According to Mercom’s India
Solar Project Tracker, Tamil Nadu has 1.6 GW of installed solar capacity.