Mahindra Susten has emerged as the lowest (L1) bidder in the auction held by Neyveli Lignite Corporation (NLC) India for the development of 20 MW of solar project with battery energy storage system (BESS) to be developed on the island of Andaman & Nicobar.

This tender was a retender with a few changes in the scope of work and the capacity of BESS has now been reduced from 28 MWh to 8 MWh.

An executive working with Mahindra Susten confirmed to Mercom that the firm has emerged as the L1 bidder in NLC India’s Andaman & Nicobar auction. When asked about the operation and maintenance (O&M) component of the price quoted, the executive refused to comment.

An official working with NLC India told Mercom, “Mahindra Susten won the contract by a slim margin, there wasn’t much of a difference between L1 and L2, Pennar Building Systems.”

“In this auction, fewer firms participated in the financial bidding compared to the previous auction that was later scrapped. Compared to the previous auction, the number of bidders was half, but the prices quoted were competitive and once again exceeded our expectations. L&T, Hero Solar Energy and BHEL were the other bidders who participated,” the official added.

When asked about the cost quoted in the auction, the official said, “At the moment, it would not be possible to disclose that. He said if the companies have shared the cost, it is up to them, that’s not under NLC’s control”.

In the previous auction, Mahindra Susten had quoted O&M cost of ₹1.2 billion (~$18.3 million) for a period of 10 years for the development of a 20 MW solar PV project with 28 MWh BESS.

Talking about the quoted cost which is believed to be lower this time , the official said, “Last time the BESS requirement was 28 MWh, this time it was 8 MWh, this has led to low cost.”

“And there may be another factor behind the low cost quoted this time. There has been a meeting between the government and battery manufacturers in which the Honorable Minister for Power, R.K. Singh assured the battery manufacturers that the government would take all possible measures to incentivize battery manufacturing in India. Now, if we consider project completion timeframe, it is 18 months from the award of contract. This is ample time for cost of BESS to go a bit lower than it is right now in India,” added the NLC India official.

When contacted, an official at National Thermal Power Corporation (NTPC) commented on the development as saying, “The news that the bids quoted are near the $20 million mark is great. This is good for NTPC. We have tendered three BESS projects in Andaman & Nicobar, one is BESS of 2 MWh for an existing project, the other is 8 MW solar PV project with BESS of 3.2 MWh and the third is a 17 MW solar PV project with BESS of 6.8 MWh.”

“According to recent news, the bids quoted were very competitive, no one quoted above $23 million for this 20 MW solar PV project with 8 MWh BESS. There was difference of just ₹10 million (`$0.15 million) between L1 and L2 bidder in the NLC auction. This is the single largest mega BESS tender, the bidders have bid at competitive prices and this will announce their entry in the market in a big way. Secondly, the NTPC projects will also be located in the same area, so if the winners of this auction win in our (NTPC’s) auction, it will lead to cost cutting for them. This can spur aggressive bidding for our auctions.”

When asked what a viable cost for these contracts would be, the NTPC official said, “It is viable, that’s why they are bidding. For firms like Mahindra which are huge, the cost is viable as they can offset their costs by various means. It is a changing market, so we cannot say for sure what is viable.”

The NTPC auction is scheduled to be held in the first week of May 2018.