According to reports, the Indian state of Karnataka is inviting bids for solar projects worth 80 megawatts (MW). A draft of the power purchase agreements (PPAs) offered under the policy has also been released. Criticism is aimed at both the lack of experience required for developers, and the benchmark tariffs set.
Under its new solar policy introduced last month, 30 MW of solar thermal and 50 MW of photovoltaic projects will be selected on the basis of the discounts offered by developers on the benchmark tariffs of INR 14.50 ($0.36) per kilowatt hour (kWh), as defined by the Karnataka Electricity Regulatory Commission (KERC). Furthermore, developers will sell their power to state distribution companies (DISCOMS).
Karnataka has set the submissions deadline, for requests for selection (RfS), for October 20 2011.
The benchmark tariff is based on certain assumptions made by KERC as per its tariff order of 2010. The capital expenditure (CAPEX) used to arrive at the benchmark tariff is INR 155 million ($3.87 million) per MW for photovoltaics.
Karnataka Renewable Energy Development Limited (KREDL), the nodal agency for the competitive bidding of the projects, has established strict guidelines for the eligibility of bidders, which can include standalone developers or consortiums.
The number of members in a consortium will be limited to three, with information required on each of the members. In the case they are selected, members of the consortium shall collectively hold at least 51 percent of the subscribed and paid-up equity share capital of the Special Purpose Vehicle (SPV) at all times, until three years from the Commercial Operations Date (COD) of the project.
The lead member shall have a 26 percent shareholding of the SPV until three years from the COD of the project. Thereafter, all members of the consortium shall, until expiry of the agreement period, hold not less than 26 percent of the subscribed and paid up equity share capital of the SPV.
These requirements are expected to inhibit the transfer of PPAs by developers looking at exiting early from projects by selling their PPAs at a premium.