Capital subsidy in form of viability gap funding may be reason for high number of bids
Photograph by Jonas Hamberg
The state-run Solar Energy Corporation of India (SECI) has received
bids for 2,170 mega-watts (MW) capacity in the first batch of projects
under second phase of the Jawaharlal Nehru National Solar Mission
(JNNSM). This is almost triple the 750 MW of solar capacity on offer.
The capital subsidy on offer for the projects, in the form of viability
gap funding (VGF), could be the reason for receipt of high number of
bids.
“SECI received 68 bids comprising 122 projects for a total capacity of
2,170 MW. This includes 36 projects under 'domestic content requirement'
or DCR category (mandating sourcing of equipment from domestic market)'
category for 700 MW and 86 projects under open category for 1,470 MW,”
said a senior official of SECI. Both the categories—open and DCR—offered
375 MW of capacity each in Batch I, Phase II.
Some of the bids are from developers such as Azure Power, ACME,
Welspun, IL&FS and SunEdison. Each company can be allocated a
maximum of 100 MW capacity (as detailed in the request for selection
document in October last year). This has been increased from 50 MW,
which was what was allowed in batch II of phase I of the solar mission.
TATA Power, Waaree, Moser Baer, SolaireDirect, SunEdison, ACME, Azure,
IL&FS and Welspun also bid for the DCR part of the allocation.
State-owned power companies from Gujarat, Karnataka, Odisha and West
Bengal have also bid for projects.
Bids to be finalised in February
This was the first bidding based on VGF—capital subsidy provided to
bridge the gap between the project cost dictated by the prevailing
electricity rate and the price quoted by a developer. The VGF of 30 per
cent of the project cost up to a maximum of Rs 2.5 Cr/MW is the
criterion for selection. The lowest VGF requirement would be selected
for installing the projects. The projects which will receive the funding
would be announced on February 20. The tariff has been fixed at Rs 5.45
per unit of electricity produced.
The almost three times the bids for solar installation is a good sign
for the industry given the fact that for the last couple of years the
surge in the solar power sector has slowed down. 2012-13 showed a
declined deployment of almost 18 per cent as compared to that of
2011-12. Also, as of December 2013, only 495 MW of solar power capacity
has been added, which is only 45 per cent of the target (1,100 MW) set
in 2013-14.
