The 1.2 GW ISTS-connected wind-solar hybrid power projects (tranche-I) tender which was floated by the Solar Energy Corporation of India (SECI)’s has been undersubscribed by 150 MW.
“The ceiling tariff for the project has been fixed at ₹2.70 (~$ 0.038/kWh)”, said a SECI official.
Talking about the set ceiling tariff, one of the developers commented, “These projects will be hardly viable financially at ₹2.70 and there is no option of bidding below that price, not even by 1 paise. The tariff ceiling was very aggressive and also a deterrent resulting in muted response. Another deterrent is that it is hard to find a good site for both solar and wind, so we will have to end up compromising on one which will affect the total generation. SECI is considering all responses from the industry and should be taking all these points into consideration.”
In total, the tender received bids aggregating 1,050 MW. Adani Green bid for the maximum capacity of 600 MW whereas SB Energy (SoftBank) bid for 250 MW.
Recently, Mercom had reported that SECI amended the RfS for 2,500 MW of ISTS-connected wind-solar hybrid power projects (tranche-I) and reduced the project capacity to 1,200 MW from the earlier 2,500 MW. The maximum bid capacity was increased from 500 MW to 600 MW. The minimum bid capacity remained the same at 200 MW with at least 50 MW of project capacity being proposed at each project site. Moreover, the ceiling tariff had been reduced from ₹2.93/kWh (~$0.040/kWh) to ₹2.60/kWh (~$0.035/kWh) which was later raised to ₹2.70 (~$ 0.038/kWh).
The declared annual effective capacity utilization factor (CUF) was reduced to 30 percent from the earlier 40 percent in the RfS.
According to Mercom’s industry source, “The ₹2.70/kWh tariff cap was very tight and the damp response was not a surprise. This is the first of its kind bid for a solar and wind hybrid project and the government is doing its best to get it right. The tariff cap is closer to the average wind tariff in India which is at ₹2.80/kWh. There is a provision in the RfS that if the bid received is higher than 50 percent of the tendered capacity but undersubscribed, then SECI can go ahead and auction 80 percent of the bid capacity (1,050 MW), which is 840 MW. So, the 1,200 MW tender will most likely be reduced to 840 MW.”
“There are two issues to be noted here. First is the loss to the government of India – If the bid is reduced to 840 MW from the 1,050 MW and 210 MW is foregone, then, considering the project cost is ₹70 million (~$981,600)/MW, which totals to ₹14.7 billion (~$206 million) for 210 MW, the loss to the government of India would be the GST of approximately ₹1.62 billion ($22.4 million), which is 11 percent of ₹14.7 billion (~$206 million). Second point to be noted is the loss to SECI – If you considered 210 MW at a capacity utilisation factor (CUF) of 30 percent, there would be a generation of approximately 552 MU in a year and if SECI’s share is 7 paise per unit, they would be losing about ₹38 million (~$532,900) per year. So, it would make economic sense to allot the 1,050 MW rather than reduce it to 840 MW.”
“The calculations might change but the gist remains,” the source concluded saying.
The scheduled date of commissioning was 18 months from the date of issuance of letter of award. This clause was also amended and the new scheduled date of commissioning would be 18 months from the effective date of the PPA. Financial closure must be achieved within 12 months of PPA.