Financial bids were opened today (3rd August 2015) for the 2,000 MW solar tender in Telangana. This is the single largest allocation in the country till date. According to unconfirmed sources, the lowest tariff for this bid has been quoted at INR 5.17/kWh by SkyPower. Sky Power had also quoted the lowest tariff in Madhya Pradesh at INR 5.05/kWh.
- Despite the manifold increase in the number and capacity of allocations in India, competition remains intense
- Appetite of developers has also increased manifold and several new players have entered the market
- We expect NSM bids for 420 MW in Rajasthan to witness even more intense competition
Bids for a total of 4,988 MW were submitted by 101 developers, i.e., an oversubscription of around 250%. Some of the prominent developers that had bid for these allocations include: SunEdison (580 MW), Acme Solar (510 MW of bids), Adani Power (492 MW), Renew Power (400 MW), Reliance Power (400 MW), Mytrah (350 MW), Suzlon (260 MW), Sky Power (200 MW), Shapoorji Pallonji (150 MW), Mahindra EPC (142 MW), Hero Future Energies (100 MW), Fonroche Energies (100 MW) and Energon Solar (100 MW).
It is interesting to note that even though the tariffs are aggressive, most developers have bid at tariffs that are on a higher side as compared to those quoted in Madhya Pradesh last month (refer). The primary reason for this difference is that unlike the normal 11 or 12 months provided for commissioning of projects in most states, Madhya Pradesh allowed a generous 18 months for commissioning of projects. In Telangana, the projects will likely be commissioned within 2016, whereas, in Madhya Pradesh, projects will likely be commissioned much later, i.e. in Q3 2017. Developers have bid more aggressively in Madhya Pradesh expecting greater cost reductions over the extended period. Another reason for the more aggressive bids in Madhya Pradesh is the availability of government land for lease at a comparatively low costs. Also, the larger overall size of the allocation in Telangana might have taken some heat off the competition.
This argument also has a bearing on expected results from allocations planned under the National Solar Mission (NSM) starting this month for a total capacity of 1,420 MW. Even though NSM projects are most favoured by developers resulting in more aggressive tariffs, we expect NSM bids in Andhra Pradesh to be slightly higher than those in Madhya Pradesh because of the higher cost and implementation risk of solar parks infrastructure.
In general, despite the manifold increase in capacity allocations, competition remains intense because of increasing appetite of existing players and entry of many new players. We expect this trend to continue as the sector continues to attract further players and project sizes grow resulting in more efficient procurement.
