The Ministry of New and Renewable Energy (MNRE) has written to the central and state governments as well as public sector implementing agencies, asking them to follow a set timetable for tendering of solar photovoltaic (PV) capacities. MNRE wrote to the states upon the direction of Minister for Power, Raj Kumar Singh.
Per the letter, “It has been seen that sometimes bids of two organizations clash with each other, thus distorting the market.” It is being thought that by following a timetable for bidding, these organizations can evenly distribute their tender and auction activity throughout the year.
Per the timetable, the Solar Energy Corporation of India (SECI) will have the months of December, March, June, and September for its tender and auction activity. The National Thermal Power Corporation (NTPC) and other public sector units will utilize January, April, July, and October for tender and auction activity. Moreover, state implementing agencies will use February, May, August and November for their activity.
The MNRE has requested implementing agencies to follow this timetable in light of the tender trajectory that was announced earlier. Per the trajectory, 30 GW of solar will be tendered and auctioned in the current and the next financial years (FYs).
When contacted, an MNRE official said, “Rooftop solar tenders will not have to follow this timetable, it is only for large-scale tenders.”
In the past, due to various reasons tendering and auctioning in Indian solar sector had slowed down. In April 2017, Mercom reported, “While solar installations in India have picked up speed, tender and auction activity has been slowing down over the last couple of quarters.”
When contacted, a top executive at one of the large solar project developers said, “This is a welcome move by the MNRE. This will give visibility to developers to plan out their participation in these tenders better. They can choose which tenders, in which months will be more amenable to them per their resources.”
But, the executive also raised a question, “How this will get implemented is the issue. Will states agree to what the MNRE is saying? After all, MNRE does not have any authoritative power; it can issue guidelines, it is up to the states to follow. Even then, this is a novel move by MNRE,” added the executive.
In the past, auctions have shown that in a few states historically companies have chosen to stay away from developing projects as conditions, policies are not that conducive for them. So, a question arises, “Won’t this timetable also allow for cherry picking of tenders and auctions by developers?” Developers are more inclined towards auctions by NTPC, SECI compared to state agencies as these organizations are less prone to breach sanctity of power purchase agreements (PPAs) or delay payments.
When asked about this, an MNRE official said, “Everything has positives and negatives. If according to certain groups, this is going to be the negatives, then we are ready to accept it as the positives far outstrip the negatives. This will boost solar installation rate in the country drastically.”
Commenting on this initiative undertaken by the government, Chetan Shah, the director of Indian module manufacturer Goldi Green, said, “This is a welcome step by the MNRE, we were expecting this to happen for a long time. Now, all manufacturers will be able to plan their production and make optimum utilization of existing manufacturing facilities. In our case, we were operating at less than 50 percent of our capacity round the year. Now, with this timetable, developers can plan participation and we can plan production throughout the year. This will also have an effect on pricing of solar modules”.
Elaborating further on the implications, Shah said, “Prices will become more competitive. All now hinges on how MNRE ensures the implementation of this order. In my opinion, MNRE must call a coordination meeting of all stakeholders (manufacturers, EPC firms, developers, government agencies) and form a task-force. This task-force will have representatives from each segment of the sector and will be tasked with monitoring tender and auction activity and ensuring that the calendar is followed.”
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This article has been updated with a quote from Chetan Shah, the director of Goldi Green