GUVNL Tenders 500 MW of Grid-Connected Solar Projects to be Developed Across Gujarat

Gujarat Urja Vikas Nigam Limited (GUVNL) has tendered 500 MW of grid-connected solar photovoltaic (PV) projects to be developed across the state.

GUVNL has announced the tender in order to fulfill its Renewable Purchase Obligation (RPO) and to meet the future requirements of distribution companies (DISCOMs) in the state. The bid-submission deadline is March 19, 2018.

In this tender, GUVNL has also given the project developers an option to produce an extra 500 MW of solar power at the Lowest Quoted Tariff (L1). When contacted, the general manager (IPP) at GUVNL said, “This is a Greenshoe option. GUVNL will allow any bidder who has been successful in the 500 MW auction to develop an extra capacity if they are willing to do it at the L1 tariff.”

A reverse auction will only be conducted for the 500 MW capacity, the official added. While the minimum project capacity a single bidder can bid for is 25 MW, GUVNL has not specified the upper tariff ceiling for the tender and a single bidder can bid for entire capacity tendered (500 MW).

The successful bidder will be responsible for setting up the solar PV power projects, including the transmission network up to the delivery point. The Power Purchase Agreements (PPAs) will be signed within one month from the date of issue of Letter of Award (LoA). The PPAs will be executed between GUVNL and the selected bidders for a period of 25 years from the date of commercial operations. The successful developers will have to secure the financing arrangements within nine months from the date of issue of LoA.

In the announced tender, GUVNL has also specified that it will encash the performance bank guarantees on a daily basis, proportionate to the capacity not commissioned in case of a delay of six months in the commissioning of the project.

However, if the commissioning of the project is delayed beyond six months from the scheduled commissioning date, the tariff discovered after e-reverse auction will be reduced at the rate of 0.50 paise (~$0.0078)/kWh per day for the delay in the capacity not commissioned for the entire term of the PPA.

The maximum time-period allowed for the commissioning of the entire project capacity with the encashment of Performance Bank Guarantee (PBG) and reduction in the fixed tariff shall be limited to 27 months from the date of execution of PPA or till the tariff becomes zero, whichever is earlier.

GUVNL has provided a list of substations that will evacuate the power from these projects. The GUVNL official told Mercom, “Few months ago, the Ministry of New and Renewable Energy (MNRE) issued an advisory asking the state governments to utilize the available spare space near substations and prioritize the construction of solar projects based on availability of land near substations or transmission system. We have kept that in mind while issuing this tender.”

In the recently held 500 MW grid-connected solar PV auction by GUVNL, a tariff of ₹2.65 (~$0.0413)/kWh was quoted. In that auction, the participating state agencies were the reason for such low bids. When asked whether this tender also has any reserved capacity for the government agencies, the official said, “No, if government agencies want to participate, they can do so as general bidders. No specific capacity has been reserved for them.”

Gujarat has so far installed approximately 1.4 GW of solar to date, according to Mercom India Project tracker.

Based on data from Mercom India Tender Tracker, over 5 GW of solar has been tendered so far this year and there are 170 MW of Gujarat tenders from 2017 that are yet to be auctioned.

Gujarat tenders are sought after because of their positive financial position and good payment history. Four Gujarat state power distribution utilities had the best ratings of A+ according to the “Integrated Rating for State Power Distribution Utilities” report.