Prolonged payment delays to solar and wind developers seem to have tarnished the reputation of Tamil Nadu Generation and Distribution Corporation (TANGEDCO) in the industry.
In a significant development, the state DISCOM has had to hand over its solar and wind tenders to the Solar Energy Corporation of India (SECI).
In a recent article, Mercom reported that in Tamil Nadu, TANGEDCO had delayed payments for more than a year to renewable developers. Moreover, the distribution company (DISCOM) also has been known for curtailing power from solar and wind projects.
These practices have affected the DISCOM’s reputation gravely, and it is finding it very difficult to find takers for its wind and solar tenders. When contacted to comment on this, a TANGEDCO official confirmed the development saying, “We have handed over the responsibility of tendering for solar and wind to SECI.”
Asked about the reason behind the move, the TANGEDCO official said, “In 2018, TANGEDCO had issued tenders for 500 MW of solar PV as well as wind power projects. But we found no takers, no one responded, and after multiple extensions, we had to cancel those tenders.”
In November 2018, TANGEDCO had tendered 500 MW of grid-connected solar PV projects. The same month, TANGEDCO had also issued a tender for 500 MW of wind power projects in the state. These tenders were canceled after a lack of response from the developers.
However, there are many agencies which cancel the tenders and reissue them later. Why didn’t TANGEDCO do the same? The official responded, “Right now, we are making delayed payments to existing suppliers of power. Bidders take that into consideration and have decided that it is a risky bet, and as a result, they stay away from TANGEDCO tenders.”
When contacted, a top executive at one of the renewable project developers operating a major chunk of Tamil Nadu’s renewable capacity said, “This was in the offing. For the past three years, TANGEDCO hasn’t been able to reform its ways, UDAY hasn’t had any effect here as curtailment and payment delay, both are rampant. The presence of SECI will provide some semblance of positivity and trust amongst bidders as it is a central government agency and will not infringe on contracts according to bidders, stakeholders.”
In April 2019, SECI issued a Request for Selection for 500 MW (Phase I) of grid-connected solar PV projects in Tamil Nadu on Build Own Operate basis. The procurer will be TANGEDCO, but here the developer will enter into an agreement with SECI.
“This was a long time coming, and it is a well-known fact that Tamil Nadu is the riskiest state to develop solar and wind projects. The move to transfer tendering responsibilities to SECI is a positive one for the developers and opens up development opportunities once again in Tamil Nadu,” said Raj Prabhu, CEO of Mercom Capital Group.
According to Mercom India’s Solar Project Tracker, Tamil Nadu has an installed capacity of approximately 2 GW of solar PV. The state has 1.6 GW of solar projects under development.