In an important development for the industry, 1.4 GW of solar projects that were awarded under the National Thermal Power Corporation’s (NTPC) 2 GW auction has been canceled due to regulatory delays.
The canceled projects were awarded to ACME Solar, Shapoorji Pallonji, and Azure Power projects for 600 MW, 500 MW, and 300 MW respectively. The developers confirmed the news to Mercom. The tariff for the projects was set at ₹2.59 (~$0.0372)/kW in August 2018.
SB Energy, who was awarded 600 MW of projects at a tariff of ₹2.60 (~$0.0373)/kWh, was the only capacity that was not canceled, an official from the NTPC told Mercom. The SoftBank-owned power producer had placed a bid for 2 GW in the auction but was awarded only 600 MW.
The 2 GW capacity was initially tendered by the NTPC in March 2018 and was oversubscribed by 4.2 GW in July the same year. Later, Indian solar project developers complained to the MNRE that the maximum allowable capacity to be bid for in this tender was too large. The domestic developers reasoned, “Such a large bid size will prohibit some of the serious players based on financial criteria such as net worth requirement, turnover requirement, line of credit, etc. Restricted competition may not provide the desired tariff levels.”
Following the imposition of safeguard duty, in a positive development for the developers, NTPC had provided bidders until August 13, 2018, to revise and resubmit their bids for the 2 GW ISTS-connected solar tender. NTPC’s 2 GW ISTS-connected solar PV tender was oversubscribed three times over. Bids amounting to 6,200 MW were submitted in response to the tender.
In August 2018, the auction results were announced and in which the four developers, ACME Solar, Azure Power, Shapoorji Pallonji and SB Energy, were declared winners.
Later, though the power purchase agreements (PPA) were signed for all four projects, three developers backed out because of delays in acquiring regulatory approvals, the NTPC official noted.
One of the developers whose project was canceled explained that the PPA stood terminated because the two-month deadline for obtaining certain regulatory approvals had lapsed.
The developer stated that as per the terms of the PPA, distribution companies (DISCOMs) were required to obtain the approvals on the tariffs, the NTPC’s trading margin, and the contracted capacity by the state electricity regulatory commission within two months from the effective date of the agreement.
The developer also explained that by failing to obtain these approvals, the PPA would stand terminated unless both parties mutually extended the timeline.
Image credit: Azure Power
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai.