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500 Megawatts Solar Tender In India’s Tamil Nadu Undersubscribed Yet Again

The latest solar power tender issued in the state of Tamil Nadu is in stark contrast to the one issued for the Newa solar power park. The former has, once again, received a poor response from the project developers.

The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) had floated a tender for 500 megawatts solar PV power capacity. The tender received bids by 22 project developers willing to set up 300 megawatts capacity. The poor response is poles apart from the 10 times oversubscription for the 750 megawatts Rewa solar power park.

The poor response it ironically still better than that received for the 500 megawatts tender previously issued by TANGEDCO. In November 2016, the tender attracted 20 bids of just 122 megawatts. The utility had no choice but to scrap the tender. Project developers were unable to purchase land for their projects due to lack of funds owning to the demonetisation drive of the Indian government.

The improved funding situation seems to have been the only reason for the relative increased interest of the developers. Lack of adequate transmission infrastructure and poor financial health of the utility remain the major concerns of bidders. The threshold tariff for this tender was also reduced by 14.7%, from Rs 5.10/kWh (7.6¢/kWh) to Rs 4.35/kWh (6.5¢/kWh), although developers have 12 months to commission the projects, an increase from 10 months.

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.