“The response is by no means discouraging,” said a senior official in the Electricity Department referring to the bids for 500 MW of solar power generation capacity submitted against a total of 1,000 MW anticipated by the Tamil Nadu Government.
In the prevailing scenario, 500 MW of concrete investment proposal in solar power is significant and unmatched by any other State, pointed out the official.
The Tamil Nadu Generation and Distribution Corporation had called for bids to set up decentralised solar power generation projects across the State and committed to enter into a 20-year power purchase agreement with the generators based on the lowest bidder.
On the last day of the bid, on Friday, over 90 potential investors submitted their bids for a cumulative 500 MW of solar power generation capacity. Among the investors were multinational players and infrastructure companies with plans to set up 10-50 MW of solar generation and individual entrepreneurs planning to set up 1–5 MW of solar power generation.
The official said once the tariff is decided there is the option for a second round of bidding, and there is keen interest among investors to set up captive facilities and exploit the Renewable Energy Certificate option. The State had managed to garner interest on such a scale through a process initiated just four weeks back, he said.
Pashupathy Gopalan, CEO-India, SunEdison, a US-based multinational player in solar power, said that Tamil Nadu had cause to be ‘jubilant.’
Gujarat had managed to tie up for about 900 MW of solar power only after multiple rounds of bidding since 2010. The National Solar Mission brought in about 150 MW in the first round and over 350 MW subsequently.
Tamil Nadu had managed to draw investor interest despite the whole “process being run at an alarmingly fast pace,” he said. But with this significant milestone behind it, the utility needs to address the issue of bankability of the PPA, he said.
It is a 20-year contract that has to be iron clad for financial institutions and investors to commit their funds.
The bids represent a cumulative investment of over Rs 5,000 crore with Rs 3,000-3,500 crore debt from financial institutions.
The PPA has to provide for adequate payment assurance and protection from policy or political changes, Gopalan said.
Other major bidders who did not want to be named, said concerns over the PPA was possibly the only reason for the State not drawing bids for the targeted 1,000 MW.
The financial condition of the cash-strapped Tangedco is a major worry. The utility has to ensure there is adequate payment ‘security and comfort’ in the agreement.