Decrease in Cost of Solar by 50% can Increase Solar Penetration by 8 Times: NITI Aayog

The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has tendered 500 MW of grid-connected solar photovoltaic (PV) projects. The bid-submission deadline is December 27, 2018.

TANGEDCO has fixed ₹3 (~$0.04257)/kWh as the upper tariff ceiling for this tender. A single bidder must bid for minimum capacity of 5 MW and up to a maximum capacity of 50 MW at a single location. A single bidder can bid for the entire capacity (500 MW).

TANGEDCO will enter 25-year power purchase agreements (PPAs) with the successful bidders. The scope of work includes the establishment, maintenance, and operation of solar power projects and supplying the generated solar power to TANGEDCO under long-term PPA at the tariff finalized through reverse bidding.

TANGEDCO issued the tender after getting Tamil Nadu Electricity Regulatory Commission (TNERC)’s approval. Recently, TNERC accepted the request for modifications in TANGEDCO’s RfS and PPA documents, by adding clauses related to payment security, change in law, and relaxation from compliance of FDI laws by foreign bidders. The request was granted in view of TANGEDCO’s 25 year-PPA that it will enter into with solar and wind power generators for the tenders of 1,500 MW each of wind and solar.

Recently, the TNERC also fixed ₹3.97 (~$0.0549)/kWh as the pooled cost of power purchase that the TANGEDCO will pay to the generators of non-conventional energy sources (NCES). The tariffs discovered in the reverse auction will be economically viable and feasible for TANGEDCO.

It has been almost a year since TANGEDCO last tendered utility-scale solar projects. In October 2017, TANGEDCO cancelled a 500 MW solar tender it had issued in January 2017, as the tariff quoted was ₹4.40 ($0.065)/kWh.