Sunshine in the South

Written by Sumit Jha | Updated: Oct 29 2014, 07:22am hrs
The newly carved states of Andhra Pradesh and Telangana could well show the way for solar power development in the country. To tide over the wide peaking power deficit, made worse by stranded gas plants, both states have embarked on a programme to build solar power capacities of 500 MW each.

The beauty of solar power projects is that these can come up pretty quickly, and start generation within eight months to one year. Moreover, unlike before, solar power has become cheaper than gas-based power. Upbeat solar power developers believe the two states could herald the beginning of similar initiatives from other states.

In Andhra Pradesh, ACME group emerged as the biggest winner with 160 MW capacity of 500 MW on offer. The bidding saw hectic competition among several players, with Wellspun, FirstSolar and Sun Edison, among others, bagging the rest of the capacity on offer.

Telangana has also floated the tender, and the bidding results are expected to be out next month.

Andhra Pradesh floated the tenders last month for 13 districts while Telangana followed on the heels and issued tenders earlier this month for a solar park of 500 MW capacity in Mahbubnagar district.

In Andhra Pradesh, NTPC is also setting up a 1 GW solar park.

The bid structure in both states is attractive although with subtle differences, for example, developers must balance their ability to raise finance for the project and against tariff profile to be quoted. The developers' success and the ability of state to implement this capacity hinges on getting this balance right, said Kameswara Rao, leader, power and mining, PwC,India

Andhra Pradesh and Telangana have been pushed into looking for alternatives to replace idle gas-based power plants to bridge the peak power deficit. Both states have found solar to be an ideal option, especially after the Centre rejected a proposal for slapping anti-dumping duty on solar equipment, creating a viable environment for developers who can keep their tariff down.

In September, Andhra Pradesh Chief Minister Chandrababu Naidu had written to the PM asking for expediting gas pooling and providing natural gas to the state on priority as close to 7000 MW of gas-based power generation capacity is lying idle in the state due to a steep decline in gas output from Reliance Industries-operated Krishna-Godavari fields.

The solar power tender document for Andhra Pradesh said that the state has a large agriculture demand and power supply is usually given to agricultural consumers in two spells, one each during day and night. Distributed solar power can help meet the demand during daytime.

Solar Power is available during daytime so it will definitely be used to bridge the peak demand-supply gap, S. Narsing Rao, principal secretary to the chief minister of Telangana and former Coal India chairman, said.

Solar developers say that even if there was gas availability, creating solar power capacity makes sense as it is less expensive and faster to develop. The deadline for commissioning in Telangana is ten months from the signing of the power purchase agreement while it is 12 months in Andhra Pradesh.

As far as installation time is concerned, some developers have said the plants can be built and put on line in as little time as eight months, Rao added.

Solar power right now has reached this stage where it is cheaper than gas-based power plants. Andhra Pradesh and Telangana have peaking power in the day time, and cost R12.5 per unit in day time, solar power costs in the region of R7-7.50 per unit. It is better to invest in solar that has a fixed cost for this, Manoj Kumar Upadhyay, chairman and managing director of ACME, said.

India currently has installed solar capacity of 2400 MW, with over 1,900 MW of capacity in the pipeline. Apart from Andhra Pradesh and Telangana, Haryana (50 MW), Uttarakhand (50 MW) and Maharashtra (75 MW) will add more solar capacity near-term.