In what would come as a relief to jittery solar power developers that had qualified to install power plants in Telangana, the state government will issue letters of intent (LoIs) to these companies in a couple of days. There has been a delay of over a month from the original schedule in LoI issuance, apparently because of a rethink on the part of the state government on the tariff discovered in the light of the experiences of other states.
Multiple sources that FE spoke to suggested that the Telangana government was deliberating the options to bring the discovered tariff down. While the weighted average tariff offered to Telangana was R5.79 per unit in August this year, the same for Punjab and Uttarakhand in the following two months were R5.6 and R5.76 per unit. The tariffs discovered in bids conducted by NTPC in November under the national solar mission crashed to new low of R4.63 per unit.
A letter of intent is a document that precedes the final power purchase agreement (PPA) entered into by producers and procurers. The delay has been causing unease among developers, as many prominent domestic players have won large capacities in the largest tender floated by any state till date, amounting to 2,000 MW.
Though the CMD of Telangana’s distribution company, G. Raghuma Reddy, refused to divulge the reasons the for delay in issuing LoIs, he told FE that the same would be issued to qualified firms by the end of this week.
“We are in touch with the concerned offices in Telangana through all official means and channels and sure about getting the LOI very soon,” ACME, which won the largest chunk of capacity(446 MW) on offer, told FE. It added that tariff in all reverse biddings have always beaten the earlier quoted tariff as it was dependent on various factors including the counter-party risk.