The poor response to Tamil Nadu’s solar power purchase tender is having an obvious consequence. The bidders are in no mood to negotiate the tariff at which they will sell electricity to the State’s distribution company TANGEDCO.
TANGEDCO, a State-owned company, put out the tender to buy solar power from up to 1,000 MW of capacity which would be set up by developers who win the right to sell power at tariffs discovered through the tender process.
Bids were opened on Friday and the total bid capacity totalled to only 499 MW. The Tamil Nadu Government had earlier anticipated bids for well over 1,000 MW.
TANGEDCO, following a TN Tender Transparency Act, had said it would negotiate with second-best and the following bids, asking them to match the best bid.
But now that the response to the tender has been poor, several developers that Business Line spoke to said they would adopt a take-it-or-leave-it stance.
For instance, SunEdison, an American company headquartered in Chennai and active in India, which has bid for 50 MW (the highest in this tender), says it may not bring down prices much. "Our view has been that we should bid for whatever best we can and leave it," the Managing Director of SunEdison, Pasupathy Gopalan, told Business Line . "I don’t see us changing our bid price appreciably," he said.
The price bids are yet to be opened and hence at this point in time the quoted tariffs are not known. However, enquiries reveal that a number of developers have bid at rather high prices — Rs 9 and above — hoping for an opportunistic windfall.
Now, the poor response to the tender provides them with just such an opportunity.
It remains to be seen whether TANGEDCO would reject the high-priced opportunistic bids. If it doesn't, the State Government will have to pay a high price for solar power, especially because the developers have been promised a 5 per cent tariff escalation for the first 10 of the 20-year power purchase period.
If it rejects the high-priced bid, it would be a loss of face for TANGEDCO if it finally comes up with something like 200-250 MW against a 1,000 MW tender.