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Units, not megawatts for Mahagenco’s solar power

According to reports, in a unique model, Mahagenco is asking solar power producers to build, operate and maintain a solar power plant, on a quasi-ownership model.

As per this model, a private developer selected would have to raise finances, and set up a solar power plant, maintain it and generate power from an asset which will remain in the state power generating company’s books.

The developer will get a right over the project for ten years.

“This is the first time for this model in India. We are trying to ensure developers are sure of this project, and must be aware of it,” said Ajoy Mehta, managing director of Maharashtra state distribution company in a workshop arranged to discuss possible bids for the project. The state government-owned generation company will also arrange the land and distribution infrastructure for the project.

A solar project set up under this programme would not be measured by Mahagenco in megawatts or the installed capacity. In fact, it would be measured according to actual generation and the units supplied or million units. A tender for this project is expected in the next six to eight months.

The first tender, which would be based on this model, would entail a project cost of Rs 400 crore, requiring a possible 50 megawatts capacity. If successful, this model could see 400-500 megawatts capacity.

After this project is commissioned, Mahagenco would pay up half of the capital cost to the developer. The Mahagenco’s investment into the project would be financed by Asian Development Bank (ADB).

“This is a model which could be followed by other states too,” said Srinivasan Janardhan, finance specialist of Asian Development Bank (ADB), at the workshop. The bank says that the selected bidder would have to order equipment from member countries of ADB. “Most of Asian countries are our members,” he said, answering queries from possible bidders.

Many solar power companies who came to the workshop raised queries on difficulties that could arise out of raising finances for a project which is not owned by them. This could increase the risk of the project, some claimed if the cost of borrowing even if lending is arranged.

“The developer would get a secured power purchase agreement,” said Debashish Mishra, senior director, Deloitte Touche Tomatsu. Deloitte is advising Mahagenco to develop this bidding process. “We are seeing a lot of developer interest,” he said.

The choice of technology to be used for the project lies with the developer. The developer can either choose between solar thermal which converts radiation into heat using either air or other fluids. Solar photovoltaic (PV) uses PV cells to convert light directly into electricity.

Mahagenco sought responses and comments on this bidding process. After considering them, it could come up with a technical round of bidding, which would later be followed by the final selection involving financial bids.

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