Tender Update

Auction activity during the past year

The renewable energy sector has witnessed some interesting developments in auctions over the past year. These include solar tariffs dipping to a record low of Rs 1.99 per kWh in a Guja­rat tender, the sudden cancellation of a big Andhra Pradesh tender, experiments with thermal blending and storage tenders, and launch of a one-of-its-kind production-lin-ked incentive (PLI)-linked solar manufacturing tender. Renewable Watch covers the key central and state renewable energy auctions and the future outlook…

IREDA’s PLI-linked solar manufacturing auction

In November 2021, under the PLI prog­ra­mme, the Indian Renewable Energy De­ve­­­lopment Agency (IREDA) released the list of winning bidders for developing manu­fa­c­turing capabilities for a minimum of 10 GW of vertically integrated high efficiency solar modules. A PLI of Rs 44.5 billion was announced by IREDA for a total capa­city of 10,483 MW. For a capacity of 4 GW each, Jindal India Solar Energy was given a PLI of Rs 13.9 billion and Shirdi Sai Elec­tricals was awarded a PLI of Rs 18.75 billion. Reportedly, Reliance New Energy So­l­ar was awarded a PLI of Rs 11.9 billion for a capacity of 2,483 MW. The manufacturing capacity and PLI were assigned to the qualifying applicants via a bucket filling procedure, taking into ac­count the overall PLI ceiling of Rs 45 billion and the PLI re­q­uested by the bidders. The waiting list of be­neficiaries was also announced by IREDA. A total of 16 bidders had qualified for this auction.

Given the structure of the PLI scheme, in which more incentives are given if the vertically integrated production is planned, the in­dustry believes select large manufacturers will receive the majority of the incentives

IREDA’s 5 GW CPSU solar auction

IREDA’s auction for 5 GW of grid-connected solar projects (Tranche III) under the Ce­ntral Public Sector Undertaking (CPSU) Pro­g­ra­mme (Phase II) was won by NTPC Limited, SJVN, NHPC, NLC India and Ircon Inter­national in September 2021. NTPC won the maximum capacity of 1,990 MW with a viability gap funding (VGF) of Rs 4.495 million per MW. SJVN was awarded a capacity of 1,000 MW with a VGF of Rs 4.472 million per MW. NHPC also secured 1,000 MW of capacity with a VGF of Rs 4.49 million per MW. NLC India won 510 MW by quoting Rs 4.474 million per MW, while Ircon Inter­national won 500 MW by quoting Rs 4.494 million per MW. The tender received a stro­ng response from the bidders and was ov­er­subscribed by 1,960 MW. The maxim­um VGF limit for the tender was Rs 5.5 million per MW, with a tariff cap of Rs 2.45 per kWh.

The tender was issued by IREDA in Ja­n­uary 2021, and the tariff for the project was set at Rs 2.20 per kWh. After the issue of the tender, IREDA extended the bid submission deadline to May 31, 2021. IREDA also amended the request for selection is­sued for the projects, and the ceiling tariff was raised to Rs 2.45 per kWh from Rs 2.20 per kWh previously.

SECI’s 2.5 GW grid-connected renewables bundled with thermal auction

The results of the much-awaited 2.5 GW round-the-clock auction by the Solar Ener­gy Corporation of India for grid-connected renewable power bundled with th­er­mal pro­jects were released in October 2021. This is the first such auction conducted in India, and it has been a largely successful one with the lowest discovered tariff of Rs 3.01 per unit. Five bidders won capacities in this auction. Hindustan Ther­mal Projects emerged as the L1 bidder, winning 250 MW of capacity at a tariff of Rs 3.01 per unit, which is quite cost co­­­­­m­­­­petitive. The ot­h­er winners were Gr­e­e­n­­ko Energies, Re­New Samir Urja, Power Mech Projects and JSW Neo. Greenko En­er­gies bid for 1,001 MW of capacity at Rs 3.18 per unit, Re­New Samir Urja bid for 600 MW at Rs 3.19 per unit, Power Mech Projects bid for 550 MW at Rs 3.30 per unit and JSW Neo bid for 600 MW at Rs 3.45 per unit but has been awarded 99 MW. The tender was issued in March 2020 with a much higher capacity of 5 GW. How­ever, it was later am­ended and the to­tal capacity was halved. The winning bid­de­rs will have to now tie up with a non-renewable energy project for their power purchase agreements (PPAs). The four bidders with higher tariffs will have to mat­ch the lowest winning tariff of Rs 3.01 per unit to obtain letters of award.

SECI’s 1.2 GW ISTS-connected wind auctions (Tranche X and Tranche XI)

SECI’s auction for 1,200 MW of interstate transmission system (ISTS)-connected wi­nd power projects (Tranche XI) took place in September 2021. In the auction, ReNew Power, Green Infra Wind Energy (Semb­corp) and Anupavan Renewables (Ever­Green) won a capacity of 300 MW, 180 MW and 150 MW respectively at a tariff of Rs 2.69 per kWh. Adani Renewable Energy and Azure Power won 450 MW and 120 MW respectively at a tariff of Rs 2.70 per kWh. Earlier, in March 2021, SECI’s auction for developing 1.2 GW of ISTS-connected wind projects (Tranche X) was launched with Adani Renewable Energy, Ayana Re­ne­wable Power, Evergreen Power and JSW Future Energy emerging as winners. Of the total capacity, Adani Renewable Energy won 300 MW of wind projects at a tariff of 2.77 per kWh, the lowest tariff in the auction. Further, Ayana Renewable Power won 300 MW, Evergreen Power 150 MW and JSW Future Energy 450 MW, all at a tariff of Rs 2.78 per kWh. JSW had placed bids for 600 MW, but was awarded only 450 MW under the bucket filling method. The auction received bids for a total of 3.15 GW of projects from 11 developers with tariffs as high as Rs 3.39 per kWh.

SECI’s 1.2 GW ISTS-connected wind-solar hybrid auctions (Tranches III and IV)

In SECI’s auction for 1,200 MW of ISTS-connected wind-solar hybrid power projects (Tranche IV) held in August 2021, NTPC, NLC India and Ayana Renewable (Project Ten Renewable) won a capacity of 450 MW, 150 MW and 450 MW respecti­vely at a tariff of Rs 2.34 per kWh. Azure Po­wer India was awarded 150 MW at a tariff of Rs 2.35 per kWh but had bid for 300 MW. Earlier, in December 2020, SECI had allocated 1.2 GW of wind-solar hybrid capacities to four renewable energy developers under Tranche III. ABC Renewable Energy was awarded 380 MW, Adani Renewable Energy Holding Eight Limited 600 MW and AMP Energy 130 MW at a tariff of Rs 2.41 per kWh. The remaining 90 MW of capacity was allotted to ACME Solar at a tariff of Rs 2.42 per kWh.

SECI’s 20 MW solar with 50 MWh of battery energy storage auction

In SECI’s auction for a 20 MW solar power project with a 50 MWh battery energy storage system at Phyang, Leh district, Tata Power Solar Systems was declared the win­ner. The total cost of the project awar­ded including taxes and duties would be around Rs 3.86 billion, which includes the engineering, procurement and construction cost of about Rs 3.68 billion and op­erations and maintenance cost of Rs 181.71 million for 10 years.

Madhya Pradesh: RUMSL’s 1,500 MW of solar projects across Agar, Shajapur and Neemuch Solar Parks

Rewa Ultra Mega Solar Limited (RUMSL) issued the letters of award (LoAs) for the construction of 1,500 MW of solar projects at the Agar Solar Park, Shajapur Solar Pa­rk and Neemuch Solar Park in Madhya Pra­desh in September 2021. All the three auctions were held between July and Au­gu­st 2021. Under a 25-year PPA, power from 1,500 MW of solar projects will be sent to Indian Railways (195 MW) in eight states via the national grid. The remaining 1,305 MW will be procured by Madhya Pradesh Power Management Company Limited.

Tata Power (TP Saurya) and AlJomaih En­ergy and Water Company were named the winners of RUMSL’s auction for 500 MW of projects at the Neemuch Solar Park. TP Saurya won a capacity of 170 MW at a quoted tariff of Rs 2.14 per kWh as well as 160 MW at a quoted tariff of Rs 2.149 per kWh. AlJomaih Energy and Wa­ter Company won 170 MW at a quoted tariff of Rs 2.15 per kWh.

The auction for 450 MW of projects at the Shajapur Solar Park was won by NTPC Re­newables and Talettutayi Solar Projects Nine (SolarArise). NTPC Renewables won a capacity of 105 MW with a quoted tariff of Rs 2.35 per kWh, as well as a ca­pacity of 220 MW quoting Rs 2.33 per kWh.

Talettutayi Solar Projects Nine (SolarArise) won a capacity of 125 MW quoting Rs 2.339 per kWh. RUMSL’s auction for 550 MW of projects in the Agar Solar Park was won by Avaada Energy and O2 Po­wer. Avaada Energy won a capacity of 200 MW at a quoted tariff of Rs 2.459 per kWh, while O2 Power won a capacity of 350 MW at 2.444 per kWh.

Maharashtra: MSEDCL’s 500 MW solar (Phase VI), 500 MW wind-solar hybrid au­c­tions and others

In July 2021, ACME Solar and ReNew Po­­wer were announced as winners for Ma­ha­rashtra State Electricity Distribution Co­m­pany Limited’s (MSEDCL) solar power au­ction for a capacity of 500 MW (Phase VI). ACME was allotted a capacity of 300 MW while ReNew was allotted 200 MW. While the former bid a tariff of Rs 2.42 per kWh, the latter put forward a tariff of Rs 2.43 per kWh. The winning bidders will enter into a long-term PPA for a duration of 25 years with MSEDCL. Ov­er­all, the tender received an enthusiastic response, with an oversubscription of about 3.5 GW. The tender for this capacity was floated in May 2021.

In the same month, Tata Power and Azure Power were declared winners at MSEDCL’s auction to procure power from 500 MW of grid-connected interstate and intra-state wind-solar hybrid projects on a long-term basis. Tata Power won a capacity of 300 MW and Azure Power of 200 MW, both at a tariff of Rs 2.62 per kWh.

Earlier, in the Maharashtra State Power Ge­neration Company’s auction for setting up 250 MW of grid-connected solar projects at the Dondaicha Solar Park in Dh­ule, TP Saurya, a Tata Power subsidiary, won the full capacity at a tariff of Rs 2.51 per kWh.

Gujarat: GUVNL’s 500 MW (Phase XI) solar auction and others

Gujarat Urja Vikas Nigam Limited’s (GUVNL) auction for 500 MW (Phase XI) of solar capacity in December 2020 set a re­cord with the lowest tariff being quoted at Rs 1.99 per kWh. Of the tendered ca­pa­city, 200 MW was allotted to NTPC Limited, 100 MW to Torrent Power Limi­t­ed, 80 MW to Al Jomaih Energy and Wa­ter Company Limi­ted, and the remaining 120 MW to Ad­it­ya Renewables at the same tariff.

Later, in March 2021, GUVNL conducted an­other solar auction for 500 MW of ca­pacity (the first solar auction after the ba­sic customs duty announcement on cells and modules). The winning bidders, which submitted the L1 tariff of Rs 2.20 per kWh, were NTPC Limited (150 MW), Sprng Energy (120 MW), Coal India Limi­ted (100 MW) and Tata Power (60 MW). Apart from these bidders, SJVN Li­mited was awarded the remaining 70 MW capa­city after it had submitted a proposal for de­veloping 100 MW of solar projects at a tariff of Rs 2.21 per kWh.

In GUVNL’s 100 MW Raghanesda Solar Park Phase X auction in May 2021, SJVN Limited won the entire capacity at a tariff of Rs 2.64 per kWh. Later, SJVN Limited won a 200 MW grid-connected solar project at a tariff of Rs 3.11 per kWh in the auction conducted by the Bihar Renew­able Energy Development Agency.

Torrent Power Limited auctioned 300 MW of grid-connected solar projects in Gu­ja­rat in which Torrent Power Generation and Adani Green Energy both won 150 MW at a tariff of Rs 2.22 per kWh.

Rajasthan: NTPC’s 190 MW Nokh Solar Park auction and SECI’s 1,785 MW solar auction (Tranche IV)

Rising Sun Energy won the full capacity quoting a tariff of Rs 2.25 per kWh in NTPC’s 190 MW Nokh Solar Park auction. The solar park is located in Jaisalmer district of Rajasthan. SECI’s tender for 1,785 MW of solar projects in Rajasthan (Tran­che IV) was oversubscribed by 9.3 GW. A total of 27 companies were shortlisted for this tender.

Andhra Pradesh: APGECL’s cancelled 6.4 GW mega solar tender to supply free power to farmers

The Andhra Pradesh High Court gave orders in June 2021 to cancel the 6.4 GW mega solar tender announced by Andhra Pradesh Green Energy Corporation Limi­ted (APGECL) in November 2020. Furth­er, the state was asked to issue a fresh tender and cancel the PPAs. APGECL had issued this tender to meet the agricultural requirements of the state. How­ever, the request for selection document and the draft PPA were not made according to the provisions of the Electricity Act, 2003. Thus, Tata Power had appealed to the Andhra Pradesh High Court claiming that the bid documents require the payment-related disputes for the plants to be taken up by the state government mechanisms ins­tead of the electricity regulator, which is not legally tenable.

The results of the 6.4 GW solar auction were announced in February 2021. The capacities allocated were spread across 10 locations in the state. In the auction, Torrent Power emerged as the lowest bidder by quoting a tariff of Rs 2.47 per kWh for a capacity of 300 MW.

Future outlook

The biggest highlight of the past year has been the PLI auction for solar manufacturing. However, the PLI scheme also recei­ved criticism from the industry. Given the structure of the PLI scheme, in which more incentives are given if the vertically integrated production is planned, the in­dustry believes select large manufacturers will receive the majority of the incentives. Also, as the total outlay of the sche­me is insignificant compared to the in­vest­ments needed in the sector, select large firms will receive most of the funding and smaller enterpri­ses will end up on the waiting list. Inte­re­stingly, much of this turned out to be true. Fortunately, in Nov­em­ber 2021, the power and new and re­ne­wable energy mi­nister announced the government’s plans to increase funding under the scheme from the existing Rs 45 billion to Rs 240 billion.

Going forward, a key concern in standalone renewable energy or hybrid projects is expected to be the increase in tariffs gi­ven the increasing price of fuel (petrol and di­esel), which will translate into higher pri­ces for different products and equipment. The import duties on solar cell and module imports from April 2022 onwards are further expected to increase project costs.

Finally, from next year, an interesting phase for the renewable energy sector will emerge as initial green hydrogen tenders and auctions are expected once the Na­tional Hydrogen Mission is finally released by end of the year.

By Sarthak Takyar

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