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Viability Gap Funding

Solar Power Tariffs In India Fall To Fresh Low Of US¢5.9/kWh

written by saurabh

Highly competitive bidding has resulted in the revision of feed-in tariff for solar power projects in India.

The Solar Energy Corporation of India has allocated 750 MW capacity in the state of Rajasthan at record-low tariff of Rs 4.00/kWh (US¢5.9/kWh). The auction was held under the Viability Gap Funding scheme wherein competitive bidding takes place for the capital cost support instead of tariffs.

The Ministry of New and Renewable Energy had recently changed the tariff structure for projects under the VGF scheme. Earlier, VGF projects had a uniform rate of Rs 4.43/kWh (US¢6.6/kWh). Now, states that have seen bids falling below Rs 4.50/kWh (US¢6.7/kWh) will have uniform VGF tariff of Rs 4.00/kWh (US¢5.9/kWh) while all others shall have tariff of Rs 4.50/kWh (US¢6.7/kWh).

So far, only the state of Rajasthan has seen tariff bids falling to below Rs 4.50/kWh (US¢6.7/kWh). The latest auction was for two phases of the Bhadla solar power park.

The lowest tariff bid in India till date stands at Rs 4.34/kWh (US¢6.4/kWh). The bid was secured by Fortum for a 100 MW solar power project as part of the Bhadla solar power park.

November 28, 2016 0 comment

India Auctions 450 MW Solar Capacity Under Capital Cost Support Scheme

written by saurabh

Solar Energy Corporation of India has auctioned another batch of projects under the Viability Gap Funding scheme.

A total of 450 MW solar power capacity was auctioned by the Solar Energy Corporation of India (SECI) in the western state of Maharashtra. The auction took placed under the Viability Gap Fund (VGF) program wherein bidders quote minimum capital cost support they would need to set up the power projects.

In the current auction, tariff was fixed at Rs 4.43/kWh (US¢6.6/kWh) with power purchase agreement with SECI for a period of 25 years. A total of seven companies were allocated capacity between 10 MW and 130 MW.

The lowest bid was placed by a company names Vijay Printing Press which secured a 10 MW project at a tariff bid of Rs 4.42/kWh and did not sought any financial support. All other winners secured projects at the fixed tariff of Rs 4.43/kWh and sought capital cost support between US$28,503/MW and US$29,988/MW.

The largest capacity, of 130 MW, was secured by a company named Solar Edge Power and Energy at US$28,503/MW. Interestingly, two foreign companies also secured large capacities. UK-based Lightsource won rights to develop 50 MW capacity while Canadian Solar will develop 80 MW capacity.

Lightsource had announced last year that it will invest in India’s solar power market following an agreement signed by the company with the Indian government. The company had announced plans to set up 3 GW of solar power capacity at a total investment of $3 billion.

September 26, 2016 0 comment

India Plans $220 Million Payment Security Fund For Solar Project Developers

written by saurabh

India has announced measures to provide financial support to solar power project developers even as the sector continues to see increasing competition in terms of tariff bids.

The Solar Energy Corporation of India (SECI) recently announced that it will set up Payment Security Fund for project developers who commissioned projects under the viability gap funding (VGF) schemes of the National Solar Mission. Under the VGF schemes, project developers do not bid for tariffs but for the lowest capital cost support required for setting up the projects.

SECI plans to set have a corpus of Rs 1,500 crore (US$220 million) in the Payment Security Fund. The corpus shall be used by the agency to cover against possible defaults in payment by power utilities and other buyers of solar power.

The first VGF scheme – phase II batch I – with 750 MW capacity has already been completed. Additional capacity under the scheme was announced when the current government came to power in May 2014. Phase II batch III and phase II batch IV plans capacity addition of 2 GW and 5 GW, respectively. Power generated from projects under these two batches will be sold at a fixed rate of Rs 4.43/kWh (US¢6.6/kWh) for a period of 25 years. The Indian government has approved funding support of Rs 7,150 crore (US$1.1 billion) for these 7 GW projects.

In addition to these schemes funding shall also be provided to projects that come up along the international border of India and Pakistan to enhance security and monitoring capabilities of the Border Security Force of India.

At any given point the fund shall have enough corpus to cover three months’ payment for all the VGF schemes.

August 28, 2016 0 comment

India Allocates 270 MW Solar Power Capacity In Odisha Tender

written by saurabh

An emerging renewable IPP has managed to grab a massive share in yet another solar power auction held by the Solar Energy Corporation of India.

The results of the first major solar auction in the state of Odisha have been declared and Odisha has finally joined the long and rapidly expanding list of Indian states where large-scale solar power projects will come up under the central government policy.

In the latest solar auction conducted by Solar Energy Corporation of India (SECI) for Odisha, 270 MW capacity has been awarded to three solar firms. Out of total 270 MW tender, 240 MW has been awarded to Essel Green Energy, an arm of Essel Group while balance 10 MW has been awarded to Jyoti Infrastructure and 20 MW to IBC Solar Ventures.

All the successful bidders will be offered fixed tariff of INR4.43/kWh (US$0.067) combined with viability gap funding (VGF) provided by SECI. Essel Green sought capital cost support of INR 4.95 million (US$73,825) per MW whereas IBC Solar and Jyoti Infrastructure asked for INR 4.925 million (US$73,452) per MW and INR 4.915 million (US$73,303) per MW respectively. The VGF amount will be paid to the project developers as lump sum on commissioning which would effectively reduce the capital cost of the projects.

Earlier this year, SECI had announced floating of 450 MW and 50 MW tender for Odisha for projects to be developed under Phase II Batch IV of the National Solar Mission. The current auction of 270 MW is believed to be part of 450 MW original tender that was first reduced to 300 MW and then further to 270 MW during the bidding process.

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August 24, 2016 0 comment

Indian State Of Karnataka Signs 1 GW Solar Power Procurement Deal

written by saurabh

The Solar Energy Corporation of India, along with the government of Karnataka, took a major step towards the off take of the tremendous amount of solar power expected to come online soon in the country.

Five power distribution utilities in the southern state of Karnataka recently signed an agreement with the Solar Energy Corporation of India (SECI) to acquire 1 GW of solar power from a solar power park currently under development.

The utilities will purchase electricity from SECI at Rs 4.50/kWh (US¢6.7/kWh) for a period of 25 years. The solar power is expected to be generated at the Pavagada solar park. Auction for individual projects to be set up at the park has already started.

Projects at the 2 GW solar power park shall be auctioned in units of 50 MW each. NTPC Limited, a state-owned power generation company, and SECI will hold auctions for these projects.

Recently, NTPC auctioned 500 MW capacity for the solar park. The capacity was allocated to six developers who are free to choose Indian or imported solar power modules for their projects. Adani Power, Tata Power Renewable Energy and Fortum India secured 100 MW capacity each at tariff of Rs 4.79/kWh (US¢7.9/kWh).

NTPC will also hold 100 MW auction wherein developers will be mandated to use only Indian-made solar PV modules. Apart from that NTPC has been designated to auction an additional 1 GW capacity. Power generated from this capacity will be bundled with power generated from NTPC’s own thermal power projects.

Solar Energy Corporation of India (SECI) will also auction 400 MW capacity for the solar power park. This capacity will be allocated under the Viability Gap Funding scheme wherein developers will bid for capital cost support needed and sell power at a fixed tariff of Rs Rs 4.43/kWh (US¢6.6/kWh).

July 10, 2016 0 comment

200 MW Capacity Auctioned For India’s Charanka Solar Power Park

written by saurabh

Expansion of the Charanka solar power park is set to begin as fresh capacity has been auctioned by the central government.

The Solar Energy Corporation of India recently auctioned and allocated 200 MW solar PV power capacity that will form part of the Charanka solar power project in Gujarat. The auction was held under the National Solar Mission phase II batch IV that provides projects developers with capital cost support at fixed tariff.

Two projects of 40 MW capacity each were secured by government-owned Gujarat Industries Power Limited. The company sought capital cost support of Rs 67.99 lakhs/MW (US$101,810/MW) and Rs 69.75/lakhs per MW (US$104,446). The total capacity cost for the project is expected to be around Rs 5.30 crore/MW (US$793,640/MW).

Another 40 MW project was secured by renewable energy IPP Orange Renewables which quoted a bid of Rs 70.25 lakhs/MW (US$105,344/MW).

Two 40 MW projects have reportedly been allocated to Mahindra Renewables, part of the Mahindra & Mahindra industrial conglomerate. One of the projects is to be developed using Indian-made solar PV modules only. Interestingly, the company placed the same bids for both the projects – Rs 77.77 lakhs/MW (US$116,455/MW).

All the projects will sign power purchase agreement with the Solar Energy Corporation of India for a period of 25 years at a fixed tariff of Rs 4.43/kWh.

The projects will expand the Charanka solar power project in Gujarat which has an installed capacity of 345 MW. The park currently includes projects that were allocated under the Gujarat Solar Power Policy 2009. The projects allocated by SECI will be the first to be commissioned under a central government policy at the park.

June 30, 2016 0 comment

Adani Green Energy Wins 100 MW Solar Power Project In India Auction

written by saurabh

Subsidiary of a leading private power generation company in India has secured a major win in the latest auction under the National Solar Mission.

Adani Green Energy, part of the Adani Group, has won rights to develop 100 MW solar power project under the viability gap funding auction organised by Solar Energy Corporation of India (SECI). Adani Green Energy participated in the auction through a special purpose vehicle – Parampujya Solar Energy.

The auction required perspective project developers to bid for the lowest capital cost support needed for setting up each MW of solar photovoltaic power project. Parampujya Solar Energy quoted a bid of Rs 59 lakhs (US$88,350) per MW. Project developers can ask for a maximum of Rs 1 crore (US$150,000) per MW in capital cost support.

The developer shall sign a long-term agreement with SECI with a fixed tariff of Rs 4.43/kWh (US¢6.60/kWh). SECI, in turn, will sell the power to utilities across the country at a tariff of Rs 4.50/kWh (US¢6.70/kWh).

According to media reports, only two other companies participated in the auction, both were Indian companies. Azure Power, one of the leading solar IPPs in the country quoted a bid of Rs 84 lakhs (US$125,800) per MW while Spectrum Coal and Power, a thermal IPP, quoted a bid of Rs 89 lakhs (US$133,300) per MW.

Auctions under viability gap funding scheme has seen participation largely from Indian companies only. The parameters of these auctions are stricter than other auctions under the state solar power policies. Auctions are only held for capital cost support while tariff is fixed at Rs 4.43/kWh (US¢6.60/kWh) for the entire tenure of the power purchase agreement.

June 21, 2016 0 comment

India Allocates 950 MW Solar Power Capacity In Fresh Auction

written by saurabh

The Solar Energy Corporation of India recently concluded yet another auction under the National Solar Mission and allocated 950 MW solar PV capacity in the southern state of Karnataka.

According to media reports, Indian companies dominated the auction where trip was fixed at Rs 4.43/kWh (US¢6.60/kWh) and perspective project developers were required to bid for capital cost support required to set up the projects. There was no restriction on the sourcing of the modules.

Largest capacity was secured by Parampujya Solar Energy, a subsidiary of Adani Green Energy which, in turn, is part of the Adani Group. The company secured rights to develop 350 MW capacity (or 37% of the total capacity on offer) with a bid for Rs 73.50 lakhs capital cost support (US$110,000) per MW.

Hero Solar Energy, a subsidiary of Hero Future Energies which is part of the Hero Group, secured the largest volume on offer. The company will set up 200 MW capacity with capital cost support of Rs 68 lakhs (US$101,825) per MW.

Other major winners included Acme Solar (160 MW) and Energon (100 MW). Parampujya Solar Energy also secured the entire 100 MW capacity on offer under the VGF auction in the state of Chhattisgarh.

Earlier this year, the Indian Government approved Rs 5,050 crore (US$750 million) funding through the Solar Energy Corporation of India (SECI) as viability gap funding to set up 5 GW of solar power projects. These projects will form part of the Batch IV of Phase II of the National Solar Mission that aims to have an operational solar power capacity of 100 GW by 2022.

June 20, 2016 0 comment

Fotowatio Renewable Wins First Solar Power Project In India

written by saurabh

The Indian solar power market continues to attracts new foreign developers despite the recent concerns over the fate of solar power project pipeline of SunEdison.

Fotowatio Renewable Ventures has secured its first win in India. The company secured rights to develop 100 MW solar power project in Andhra Pradesh. The project shall be part of a larger solar power park in the state.

The project was allocated through a competitive auction where the tariff was fixed but bidders had to indicate the lowest capital cost support they would need from the government.

Fotowatio will set up the 100 MW with a capital support of Rs 44.5 lakhs (US$67,000) per MW at a fixed tariff of Rs 4.43/kWh. The capital cost support desired by the company is less than 9% of the total capital cost determined by the Indian regulatory body for solar PV projects for the current financial year.

Other major winners of the tender were Acme Solar (150 MW), Tata Power Renewable Energy (100 MW) and Azure Power (50 MW). These developers will receive capital cost support of between Rs 55 lakhs (US$82,800) to Rs 74.5 lakhs (US$112,200) per MW against the estimated capital cost of around US$790,000 per MW.

Fotowatio Renewable Ventures was in the news recently for being part of a consortium that place the world’s lowest-ever solar power bid. The consortium had placed bid of US2.99/kWh for the third phase 800 MW capacity of the Dubai solar power park. This tariff is less than half the tariff Fotowatio will receive in the Andhra Pradesh project.

Fotowatio was acquired by Saudi Arabia-based Abdul Latif Jameel Group in April 2015.

May 7, 2016 0 comment

Orange Renewable Signs PPA For 100 MW Solar PV Project In India

written by saurabh

A renewable energy independent power producer, Orange Renewable, has signed a power purchase agreement to sell power from a large solar power project in Maharashtra.

Subsidiary of Singapore-based AT Holdings, Orange Renewable, has signed a power purchase agreement with the Solar Energy Corporation of India (SECI) for 100 MW solar PV project. The company had won rights to develop the project during a competitive auction held earlier this year.
The auction was organised by SECI for setting up 450 MW solar power park in the state of Maharashtra. Projects were offered under the viability gap funding mode with fixed tariff of Rs 4.43/kWh (US¢6.6/kWh). Developers were supposed to bid for the lowest capital cost support needed to set up the projects.

Interestingly, one of the bidders placed a bid of no capital cost support and even offered to develop a 30 MW project at lower tariff of Rs 4.41/kWh. Orange Renewable placed a bid of financial support of US$68,816 per MW to implement 100 MW project at the fixed tariff of Rs 4.43/kWh. Another major renewable energy IPP Welspun Renewables Energy also secured 100 MW with capital cost support of US$80,410 per MW.

Orange Renewable winning the bid for a solar power project is continuation of a recent trend in India which has seen wind energy projects developers entering the solar power market. Solar power enjoys comparatively stronger regulatory support. And a number of important financial incentives for wind energy sector are set to expire at the end of this financial year.

April 23, 2016 0 comment