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Top players to queue up for solar power tender

According to reports, with the government fixing the price per unit and offering a viability gap funding (VGF) to developers to set up 750mw solar capacity under the Jawaharlal Neh-ru National Solar Mission (JNNSM), the tender is expected to receive an excellent response.

However, there are concerns among developers over lack of clarity on timeline for the anti-dumping duty (on cells and crystalines imported by solar power plant developers from China and the US). The volatility in exchange rates also worry developers.

Solar Energy Corporation has invited bids for 750mw of photovoltaic-based solar plants in a first national auction since 2011, fixing the price of power at Rs 5.40 paise per mw, and providing Rs1,875 crore in viability gap funding.

All major solar power producers — Tata Power Company, Mahindra Solar, Indo Solar, Lanco Solar, Chemtrols Solar, Clover Solar and Jackson Power — are planning to bid for the projects in the range of 20mw to 50 mw. The deadline is fixed at November 29.

Hitesh Doshi, chairman and MD of solar power generator and module manufacturer Waaree Group told Financial Chronicle that the government should see a very good response to the latest auction. “The fixed price component with viability gap funding to the lowest bidder is an important change from the previous auctions that attracted aggressive bids under the reverse bidding system. However, there are concerns over anti dumping duties that might increase the cost of the projects by 15 per cent if the duty imposed is around 30 per cent,” said Doshi.

TC Arora, founder of Accunergy, a Delhi-based consultancy firm for the renewable energy sector, said any company that agreed to achieve generation at the offered price and sought the lowest grant under VGF would win. “Also, the grants under VGF could be a saving to companies that can raise cheap or low-cost funds, especially big companies such as Tata Power and Mahindra Solar,” Arora said.

Rahul Shah, chief of business development for renewable energy at Tata Power, said, “We expect the price of solar power to intersect with the rising cost of conventional thermal power in a few years from now. As the cost of power is going up in the conventional sector, with rising tariff, the intersection or grid parity may happen in two to three years time.”

One of the objectives of the government is also to get grid parity for solar power as soon as possible. The auction would make it obligatory on developers to source around 50 per cent of their modules and cells through domestic manufacturers.

Solar PV module manufacturers such as Tata Power Solar, Moser Baer and others have demanded a 35-40 per cent import duty on the solar power generating crystalline modules imported from China on the lines of similar anti-dumping duty imposed by the US.

There is also belief that Indian solar PV manufacturers are only doing the screw tightening exercise and the value addition is not more than 25 per cent to the existing products. Rest of the material is imported from abroad. “The only way India could benefit is by importing the technology first and then setting up manufacturing plants on large scale to meet demand. Besides, the policy on setting up such costly PV manufacturing plants should be clear since setting up a silicon PV plant can cost around $1 billion or Rs 6,000 crore.

“The Chinese have made equipment for all sorts of requirements that are both costly and cheap. The good quality products with higher cost attached are supplied to the European Union, while low quality products come to India, since Indians are demanding low cost equipment. This is what should stop,” said Arora.

Another round of 750mw solar power bids under the power ministry is also expected in two months. That would see bundling of projects underboth solar PV and solar thermal.

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