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Solar-wind hybrid tender stuck


13 November 2020 | BRIDGE TO INDIA

Solar-wind hybrid tender stuck

Bid submission deadline for SECI’s 1,200 MW solar-wind hybrid tender (tranche 3) has been extended again to 20 November 2020. The tender was issued in January 2020 and since then, there have been five amendments and a staggering 15 extensions for bid submission date. The latest amendment issued in October 2020 follows new MNRE guidelines for solar-wind hybrid projects. Main change pertains to mix of technologies – each source should account for at least 33% of contracted capacity as against at least 25% of capacity for other source.

  • The amendments, made in response to demands from different stakeholders, seem arbitrary;
  • Shorter execution timelines, requirement to stay within 2% of L1 tariff and inadequate protection from ‘change in law’ risk would be major concerns for project developers;
  • Potential lack of interest from DISCOMs also raises questions for prospects of this tender;

The changes are essentially a patch work of fiddles in response to pushes and pulls from DISCOMs, equipment suppliers and IPPs. For example, DISCOMs want low tariffs. Wind turbine manufacturers, on the other hand, are unhappy with low share of wind power in previous hybrid projects (effectively about 25% of total capacity) and have been pushing for an increase in share of capacity. However, the proposed increase is nominal. Performance BG amount, now less than 2% of capital cost, is reduced as a concession to IPPs but is now too small to be a meaningful deterrent.

For project developers, shorter timelines would be a major risk particularly for the wind component – under construction projects are delayed by more than 12 months due to land acquisition and transmission connectivity constraints. The proposed ‘change in law’ compensation amount, based on cost of debt funding cost, is also troubling as in practice, any extra costs are funded by a mix of equity and debt funds. Levy of BCD on solar modules, which seems imminent, would be a substantive incremental cost and compensation based only on cost of debt would be inadequate.

All three previous solar-wind hybrid tenders issued by SECI (including the ‘blended wind’ tender) have been heavily undersubscribed. We expect interest in this tender to also remain small due to concerns around tight execution timelines, requirement to stay within 2% of L1 tariff and ‘change in law’ risk. Winning tariff could be expected in INR 2.80-2.90/ kWh range raising additional concerns around attractiveness of this power to DISCOMs.


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