The Gujarat Electricity Regulatory Commission (GERC) recently approved the tariffs discovered through a competitive bidding process conducted by the Gujarat Urja Vikas Nigam (GUVNL) to procure 600 MW of power from grid-connected solar power projects at the Khavda Solar Park, with a greenshoe option of an additional 600 MW.

The Commission approved a tariff of ₹2.73 (~$0.033)/kWh for 200 MW from NHPC, ₹2.88 (~$0.035)/kWh for 200 MW of solar power from SJVN Green Energy-a wholly-owned subsidiary of SJVN, and ₹2.89 (~$0.035)/kWh for 200 MW of solar power from NTPC Renewable Energy.

In response to a petition filed by GUVNL, the regulator also approved a tariff of ₹2.73 (~$0.033)/kWh for procuring 600 MW of solar power under the greenshoe option from the Gujarat Industries Power Company (GIPCL).

GERC directed GUVNL to sign power purchase agreements (PPAs) with the successful bidders for the allocated capacity and tariff discovered in the bidding process.

Background

GUVNL had issued a tender on September 29, 2022, to procure 600 MW of solar power.

It received bids from ten bidders offering an aggregate capacity of 2,600 MW. NHPC, SJVN Green Energy, and NTPC Renewable Energy were declared winners in the final e-reverse auction.

The tender also allowed for the allocation of an additional 600 MW capacity through the greenshoe option for organizations owned or controlled by the government of Gujarat.

Considering no government organization, except GIPCL, participated in the tender, it consented to the greenshoe option.

GUVNL, in its submission, said the tariffs discovered for solar park-based projects are usually higher than those of non-park-based solar projects due to the challenging geographical conditions of wastelands utilized for their development.

The DISCOM, while justifying the tariffs, also said that the Khavda Solar Park is situated in a low-lying area with silty, clay-rich soil, which poses a challenge for building foundations for structures and modules sustainably, necessitating extra measures. The land patches in this region are prone to frequent flooding due to proximity to water bodies. All of these factors lead to increased expenses and risks.

Commission’s Analysis

The Commission observed that GUVNL had conducted the tender process, including the e-reverse auction, transparently and adopted the tariffs. It also agreed to the submissions by DISCOM explaining the reason for higher tariffs.

GERC stated that the successful bidders must sign PPAs with GUVNL within 30 days from the date of issuance of Letters of Intent. GUVNL had issued the Letters of Intent to all the successful bidders on May 16, 2023, but the PPAs are yet to be executed.

The state regulator directed GUVNL to publish the names of the successful bidders and the tariffs quoted for 30 days on its website.

In May this year, GERC had adopted the tariff of ₹2.51 (~$0.030)/kWh for GUVNL to procure 500 MW of solar power with a greenshoe option of an additional 360 MW.

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