Demonetisation Hits One Of India’s Largest Solar Power Tenders

It seems that the state of Tamil Nadu will have wait a bit longer to have the adequate solar power capacity operational to achieve the renewable purchase obligation.

Demonetisation drive implemented by the Indian government on 8 November has crushed the hopes of the state utility for an bumper solar power auction. State-owned power utility Tamil Nadu Generation and Distribution Corporation (TANGEDCO) had issued a tender for setting up 500 MW of solar PV power projects last month.

According to media reports, the utility has received only 20 bids with cumulative capacity of 116 MW. The reason for such poor showing is the inability of project developer to acquire land. Several developers reported that they were unable to pay cash to acquire land after currency notes of denomination Rs 500 and Rs 1000 were declared illegal for transactions starting 9 November 2016.

This auction for critical for TANGEDCO to increase the installed solar power capacity to a level which is closer to what it needs to meet the solar power purchase obligation.

Tamil Nadu Generation and Distribution Corporation (TANGEDCO) had approached the commission to let it auction this capacity as it would not be in a possible to meet the assigned target to acquire 5% of electricity from solar power projects for financial year 2017-18.

According to government estimates, an installed capacity base of 2.5 GW will be required to meet the 5% solar RPO target in 2017-18. TANGEDCO, however, expects that only 1.6 GW solar power capacity would be operational by that time, thus leaving a shortfall of 900 MW.

A tariff bid ceiling of Rs 5.10/kWh has been set for the purpose of competitive auction. TANGEDCO expects that the winning bids would be much lower, possibly closer to the national record low of Rs 4.35/kWh (US¢6.50/kWh).

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