India defers largest global solar tender on bidders concerns
Solar Energy Corporation defers a tender for 10,000 MW of solar power till 12 October
Ahmedabad/New Delhi: State-run Solar Energy Corporation of India (SECI) on Thursday deferred a tender for 10,000 megawatts (MW) of solar power till 12 October on bidders request for extending time for securing tie-ups for domestic manufacturing and completing ongoing negotiations for sourcing modules at better prices.
There are five packages of 2000 MW each for the largest global solar tender. A successful bidder will have to set-up a domestic manufacturing capacity of 600 MW each for every package won. The efforts is aimed at further lowering the country’s solar power tariffs and provide a boost to the National Democratic Alliance (NDA) government’s Make in India plans.
To be sure, this is the second time the tender linked with setting up 3000 MW of domestic manufacturing capacity has been deferred.
According to a notification on SECI’s website, the last date of bid has been extended till 12 October with the techno-commercial bids to be opened on 15 September. These contracts will be awarded to developers who will quote the lowest price at which they will sell electricity in the auction process for the grid-linked capacity.
Most solar power developers in India have been sourcing solar modules and equipment from countries such as China, where they are cheaper. This has resulted in domestic manufacturers accounting for only around 10% of the market despite India having an ambitious 175GW clean energy target by 2022, of which 100GW is to come from solar projects.
To encourage solar manufacturing, the government introduced the manufacturing-linked solar scheme, where developers would be provided with assured power purchase agreements (PPA). India, the world’s third-largest energy consumer after the US and China, is running the world’s largest clean energy programme.
However, concerns around India’s emerging green economy remain.
According to Moody’s Investors Service, the weak credit quality of off-takers, typically state-owned distribution companies, remains a key credit challenge facing green energy developers.
India achieved a record low solar power tariff of ₹2.44 per unit in May 2017. India has also imposed a safeguard duty on solar cell and module imports from China and Malaysia. With modules making up nearly 60% of a solar power project’s total cost, a majority of Indian developers have been placing orders with Chinese manufacturers because of their competitive pricing. For China’s solar module manufacturing capacity, estimated to be around 70 GW per year, the major markets are the US, India and China itself.
Also, the ministry of new and renewable energy is planning to cap India’s solar power tariffs at ₹2.5 and ₹2.68 per unit for developers using domestic and imported solar cells and modules, respectively.
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