Jharkhand to allocate 1,200 MW of solar capacity

07 December 2015 |

Last week, Jharkhand, one of India’s largest coal producing states and governed by BJP, announced a new tender for 1,200 MW of solar capacity allocation under its state policy (refer). This is the first such tender for the state. Projects under this tender are expected to be allocated under two categories: 200 MW for projects smaller than 25 MW (minimum size is 1 MW) and 1,000 MW for projects ranging between 26 MW and 500 MW. The projects in the first category will get 13 months for commissioning and those in the second category will get 18 months.

• If all projects under this tender are successfully commissioned, the state will be able to meet over 90% of its peak consumption and over 20% of its overall power requirement through solar in the year 2018-19
• In view of Jharkhand’s higher risk profile and availability of several other project development opportunities in the market, we believe that bids under this tender may not be as competitive
• The state’s recent approval to join the central government’s debt recast scheme is likely to improve the off-take risk in the state

Jharkhand’s solar tender follows on the heels of another 1,200 MW tender from Karnataka just two weeks ago under its state policy (refer). These tenders come at a time when the Indian market is flush with new allocations. Current pipeline of utility scale projects in India, excluding this tender, stands at around 15 GW, split between 10 GW where tender process has already been completed and another 5 GW where tender process is underway. While it is great to see many Indian states come out with ambitious tenders for solar projects, some important issues arise. Firstly, are these tenders well thought out in terms of overall state policy and regional power sector situation? Jharkhand, for example, already has more generation capacity than its power consumption. If the new solar projects are commissioned, the state will be able to meet over 90% of its peak consumption and over 20% of its overall power requirement through solar in the year 2018-19. As we pointed in our last weekly update, 40% of capacity allocated under state policies in the past two years is either significantly delayed or cancelled for various reasons (refer). Secondly, such rapid ramp up in capacity allocation means that the equipment suppliers and contractors may actually struggle to deliver all these projects. There is an urgent need for the state and central governments to co-ordinate time-table for solar tenders to ensure that pace of project development is consistent with the financial and operational capacity of the private sector.

Land cost and irradiation in Jharkhand are expected to be more favorable than some of the north Indian states such as Punjab and Uttar Pradesh. However, risks arising out of local insurgency in the state could cause problems for project developers. Moreover, due to high technical and commercial losses, Jharkhand State Electricity Board has a very poor credit risk profile. Its credit rating is C+, ahead of only four other distribution utilities out of a total of 39 rated (refer). However, the state has recently given an in-principle approval to join the central government’s debt recast scheme, UDAY (refer). In view of Jharkhand’s higher risk profile and availability of several other project development opportunities in the market, we believe that bids under this tender may not be as competitive.


Recent reports

Technical Standards For Balance of Systems In Solar Projects

India’s solar capacity has grown from just 10.5 GW to 52 GW in the last five years and the country has adopted ambitious target of building 280 GW s...

Download

India PV Module Intelligence Brief – Q4 2021   

BRIDGE TO INDIA has released a new quarterly report India, India PV Module Intelligence Brief, capturing ongoing demand-supply, pricing, technology an...

Buy Report

Solar pumps – waiting to take off   

The government has set a target to install 2 million off-grid and 0.75 million grid connected agricultural solar pumps by FY 2023. However, progress h...

Buy Report Download Executive Summary

India Solar Rooftop Map | December 2021

India Solar Rooftop map is an info-graphic report providing a snapshot of rooftop solar market in India – capacity addition across states and consum...

Download

India Solar Map | December 2021

India Solar Map 2021 is an infographic report that provides a state-wise break up of utility scale solar commissioned and pipeline capacity. It also s...

Download

Green Recovery Through Renewables

The Covid 19 crisis provides an opportunity for India to change its development trajectory and focus on green power and sustainability. This report sh...

Download
Award winnig research
We use cookies to offer you an optimal user experience and collect information on website usage.