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Solar auctions: Govt relaxes norms to attract bidders

Major solar tenders have remained under-subscribed recently with issues such as irregular payments, land acquisition and abrupt power curtailment from the state-owned power distribution companies (discoms) making the industry jittery.

Making curtailment norms more stringent, the new bidding fiats state that if discoms curtail power procurement from the solar units, they will have to pay full price for the electricity not bought instead of 50% mandated earlier.

In the wake of tepid response received from the industry towards recent solar auctions, the ministry of new and renewable energy (MNRE) has amended the terms for bidders, allowing developers more time and flexibility to set up projects.

This is the fourth set of revisions since the launch of auctions in August 2017. Major solar tenders have remained under-subscribed recently with issues such as irregular payments, land acquisition and abrupt power curtailment from the state-owned power distribution companies (discoms) making the industry jittery. According to a senior MNRE official, the amendments have been incorporated in the solar bidding norms after extensive consultation with the industry.

Earlier, developers were mandated to submit the requisite land documents within 12 months of signing power purchase agreements (PPAs). The new amendment allows solar project owners to submit the documents on or before the scheduled date of project commissioning, which is usually kept at 18-24 months of signing PPAs, effectively providing 6-12 additional months to tackle land acquisition issues.

Making curtailment norms more stringent, the new bidding fiats state that if discoms curtail power procurement from the solar units, they will have to pay full price for the electricity not bought instead of 50% mandated earlier. “No back-down/curtailment to be ordered without giving formal/written instruction for the same,” the notification added, and the “justifications for such curtailment, to be made public by the concerned load dispatch centre.”

To reduce uncertainties among developers, the new amendment clarifies that if state electricity regulators do not ratify tariffs discovered through competitive bidding within sixty days of the submission of relevant documents, such tariffs would be automatically deemed as approved. This amendment has been incorporated after Uttar Pradesh recently stopped buying power from 650 MW of renewable projects, stating that the Rs 3.46-per-unit tariff, discovered in 2017 reverse auctions, had not been approved by the Central Electricity Regulatory Commission (CERC). MNRE also said that solar developers would have to deposit Rs 5 lakh for every mega-watt (MW) of power generation being set up towards the payment security fund. The new notification has also explained the definition of ‘force majeure’ in detail.

Under-subscribed tenders may pose a threat for the government to meet the deadline for installing 175 giga-watt (GW) of renewable energy is December 31, 2022. The installed renewable capacity now stands at 82.6 GW. Renewable generation capacities already slowed down in FY19, when the country added 8.6 GW against 11.3 GW and 11.8 GW added in FY17 and FY18, respectively. According to renewable research firm Mercom India, recent under-subscribed solar tenders include the Solar Energy Corporation of India receiving bids for only 922 MW against the proposal for 2,000 MW. The same organisation could bid out only 720 MW of wind-solar hybrid projects while it had called for 1,200 MW. Gujarat state electricity board also received quotes for only 600 MW against its call for 700 MW. Last week, NTPC’s invitation for bids for setting up 1,200 MW of solar generation units received a tepid response with only one company winning the bids for 300 MW.

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