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Solar park tenders, power purchase on hold as Rewa bids disrupt market

According to reports, the low bid received for the Rewa solar park in Madhya Pradesh has jolted the market in many ways. While most states are rethinking their tenders, many have gone slow on buying solar power contracted at higher rates.

Solar Energy Corporation of India (SECI) has extended the deadline for three solar parks, Charanka in Gujarat, Bhadla in Rajasthan and Kadapa in Andhra Pradesh. Sources said the tenders had been put on hold after solar tariffs declined to a levelised Rs 3.3 per unit at the Rewa solar power park.

At the Bhadla solar power park, the portion of the project to be built by domestic content has been scrapped. “The cost of solar power has fallen so low that we now have to rethink the process. The reason for shelving the domestic content requirement is in line with the effort to bring down the cost,” said an SECI executive.

 One reason for the Rewa park receiving low bids is Madhya Pradesh has provided assurances over power offtake and offered a sovereign guarantee in case of purchase default. Bihar (350 Mw), Chhattisgarh (500 Mw), Tamil Nadu (550 Mw) and Jharkhand (1000 Mw) are states that have extended the deadlines for solar power projects indefinitely citing a demand deficit and falling tariffs.

Jharkhand is yet to sign a power purchase agreement (PPA) for its 1,000 Mw solar project offered last year. The winning bid range was Rs 5.08-7.95 per unit. Sources said it was likely that Jharkhand would shelve the tender.

“Its own power distribution company (discom) is not agreeing to buy solar power at this high rate,” said an executive who participated in the bidding.

To push the case of low solar power costs, the ministry of new and renewable energy (MNRE) has written to all states to study the Rewa model and redesign their solar tenders. In a letter to chief secretaries of states rich in solar power, the Centre has urged them to change the underlying bidding conditions to make them similar to what Madhya Pradesh offered, said sources in the know.

Among states that have stalled power purchase is Tamil Nadu, which has backed down power from its largest 650 Mw solar power park set up by Adani Green Energy. The state had signed the power purchase agreement at Rs 7 per unit in 2011.

Adani Green Energy has moved the Tamil Nadu Electricity Regulatory Commission and the Appellate Tribunal of Electricity against the state’s backing down of power from its plants.

State officials said the power from the plant was costly. The Adani Green Energy spokesperson did not respond to queries.

Experts said one reason for the surge in sales of renewable energy certificates in the past three months was that their price was close to tariffs. The Central Electricity Regulatory Commission in a recent order lowered the floor price of solar RECs to Re 1 per unit.

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