02 September 2014 | Jasmeet Khurana
The newly created south Indian state of Telangana, which was carved out of the state of Andhra Pradesh, has announced a 500 MW solar PV tender (refer). This comes within a month of the now smaller, remaining part of Andhra Pradesh announcing its own 500 MW tender (refer). While the Andhra Pradesh tender is based on the district wise L1 method of bidding, where all the perspective bidders need to match the lowest bid tariff for that particular district, the tender in Telangana is based on a regular tariff based bidding mechanism, as has been used in most other state and national bids. Due to the complicated bidding mechanism in Andhra Pradesh, it can be expected that Telangana receives a higher interest from developers.
- New tenders are indicators that both the states are ambitious about solar
- The developments in Andhra Pradesh and Telegana are part of a larger upswing in the market
- With the rejection of anti-dumping duties , projects under batch one of phase two of the National Solar Mission (NSM) will gain momentum
Unlike the Andhra Pradesh tender that places a limit of 100 MW per bidder, the Telangana tender puts no such limit. However, the deadline for commissioning in Telangana is 10 months from the signing of the PPA as compared to 12 months in Andhra Pradesh. A shorter timeline means that developers might prefer to opt for smaller projects.
Given that the erstwhile combined state had also signed PPAs for around 600 MW, these new tenders just go to show that both the states are still ambitious about solar and are looking at it not just from a renewable purchase obligation (RPO) perspective but also as an attractive option for augmenting power generation.
The developments in Telangana and Andhra Pradesh are part of a larger upswing in the market. With the rejection of anti-dumping duties on a pan-India level, projects under batch one of phase two of the National Solar Mission (NSM) and projects in states such as Karnataka, Punjab, Uttar Pradesh, Andhra Pradesh, Madhya Pradesh and Chhattisgarh will pick up pace. Over 1,900 MW of capacity is in the pipeline (PPAs already signed). Over and above this, the ongoing and upcoming allocations such as batch two of phase two of the NSM (750 MW), Andhra Pradesh (500 MW), Telangana (500 MW), Haryana (50 MW), Uttarakhand (50 MW) and Maharashtra (75 MW) will add more solar opportunities.
This growing project pipeline, combined with the rejection of anti-dumping duties and the new government’s yet to be detailed ambitious plans for solar, the future looks much better than what it did this time last month. If the new government can now just ensure that these ebbs and flows in the solar investment climate are moderated, its job will be half done.
Jasmeet Khurana is a Consultant at BRIDGE TO INDIA