Tangedco's bid to procure solar power backfires

Chennai: Tamil Nadu Generation and Distribution Corporation’s bid for procuring 500 MW solar power got a poor response owing to the stringent qualification criteria for the developers to take part in the bidding process, according to the Bridge to India, a global solar energy consulting firm.

Tangedco had floated a tender last month for 500 MW of utility-scale solar projects but it received bids for a total of 116 MW capacity from 20 solar developers that too predominantly from smaller players.

The bids were called following the signing of power purchase agreement with 84 solar developers for a combined capacity of 1484 MW at a preferential tariff of Rs 7.01 per unit in 2015.

Under the preferential tariff regime, altogether Tangedco received the application from 152 developers for a total capacity of 3873 MW. “Given such large over-subscription, Tamil Nadu tightened qualification criteria significantly for this tender. Bidders were required to own land at the time of bidding and fully commission the projects within 10 months of PPA execution, which is much more stringent in comparison to other tenders,” said the Bridge to India report.

However, senior Tangedco officials maintain that the poor response to the bids was owing to the centre’s announcement of the demonetisation that affected the purchase of land. “Many developers are also expecting a fall in the interest rate in the wake of the banks receiving huge deposits,” the official said.

It noted that no credible steps were taken to address the developers major concerns about grid curtailment and payment delays. “There is no reasonable justification for why Tamil Nadu does not go through National Thermal Power Corporation (NTPC) or Solar Energy Corporation of India (SECI) for procuring solar power as it could enhance off-take bankability and help reduce tariffs,” the report said. Tangedco is in poor financial health with a credit rating of C+ as per the ministry of power framework.