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As Tamil Nadu falters, Andhra Pradesh solar tenders oversubscribed

According to reports, Andhra Pradesh’s push to mitigate a power crisis by adding capacity through the solar route has gotten off to a much better start than its southern neighbour — Tamil Nadu. While Tamil Nadu’s solar tender for 1 gigawatt — one of the biggest in the country — received bids for only half the capacity on offer, a similar tender by Andhra Pradesh has been oversubscribed by 34%.

Both southern states are facing huge power deficits. Tamil Nadu, with a power deficit of 4 GW, has drawn up an ambitious plan to add 3 GW through solar by 2015. Likewise, Andhra Pradesh has a deficit of at least 2 GW and released its solar policy last September, but is yet to specify any target.

Hyderabad-based climate change consulting firm EfficientCarbon said about 184 firms bid for AP’s solar tender for a total cumulative capacity of 1.40 GW. This figure is yet to be confirmed by the state’s power distribution utility AP Transmission Corporation . In comparison, only 92 firms bid for 0.5 GW in Tamil Nadu.

“This is mainly because of more time for commissioning of projects and the receptive nature of AP’s state utility in addressing developers’ concerns,” said Bharat Bhushan Agrawal, solar analyst with Bloomberg New Energy Finance.

Industry experts said AP handled its bidding process better, giving more leeway in terms of pricing and project completion. Also, APTransco’s reputation for clearing payments is much better than that of its counterpart in Tamil Nadu, Tangedco. Initially, both Andhra Pradesh and Tamil Nadu launched their 1 GW tenders in December with the winners to be announced in the first week of January 2013. But AP’s tender document missed out some important provisions, which were pointed out by the developers during a pre-bid meeting.

Subsequently, the state revised and reissued it tender to receive the bids on February 7, making changes in provisions for ‘letter of credit’ and pushing back the execution deadline to 12 months from six.

Tamil Nadu, though, stuck to its original project deadline of eight months, despite some developers giving the feedback that it was a stiff task. AP also adopted the lowest bid price model — popularly known as ‘L1’ — for its tender like Tamil Nadu, but each location in the state will separately arrive at the bid price, which will be compared with the benchmark price.

On the other hand, Tamil Nadu has a single ‘L1’ price for the whole state. “The fact that AP’s bidding date came after the TN process ended might have enticed companies that didn’t have sufficient time for the TN bid to move to AP,” said Sandeep Chillakuri of Hyderabad-based Ilios Power. “AP also has a high concentration of infra-based companies.

A look at the list of companies that bid suggests that a lot of statebased infra companies have shown interest .” Madhavan Nampoothiri, founder-director of RESolve Energy Consultants , said big companies that shied away from the TN bid, such as Astonfield Renewables, Azure Power, Enerparc and KSK, among others, participated in the AP tender.

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