The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) tendered 500 MW (AC) of solar in a bid to fulfill its renewable purchase obligation (RPO). Interested solar developers have been requested to submit bids on or before February 10, 2017. The TANGEDCO has set an upper tariff limit of ₹4.50 (~$0.066)/kWh and plans to offtake the energy generated from these projects through long-term energy purchase agreements (EPA) for 25-years.

TANGEDCO has reduced the upper tariff limit to ₹4.50 (~$0.066)/kWh from ₹5.10 (~$0.075)/kWh (issued in October), a drop of 12% in just 3 months. With module prices dropping by about 30% in the last 12 months and 10% since August, the tariff benchmark may still be viable. However, the risk premium in Tamil Nadu is high; the state has a history of late payments and solar curtailment which may scare off many developers.

The project commissioning timeline has been extended in this tender to 12 months compared 10 months in the previous tender.

The scope of work includes, establishment, maintenance and operation of solar power projects of minimum 1 MW (AC) and above (up-to 500 MW (AC)) in a single location and supplying the generated solar power to TANGEDCO under long-term EPA at the tariff finalized through reverse bidding.

The Tamil Nadu Electricity Regulatory Commission (TNERC) has RPO targets of 2.5 percent for the financial year (FY) 2016-17 and 5 percent for FY2017-18. To meet its RPO targets, ~1,500 MW of solar power is required for FY2016-17 and ~3,200 MW for FY2017-18.

Mercom previously reported that TANGEDCO had tendered 500 MW in October, but received tepid response with bids to develop only 117 MW.

Tamil Nadu is expected to join the Ujwal DISCOM (distribution company) Assurance Yojana (UDAY) next week, a government program designed to bring about the financial turnaround of DISCOMs in the state.