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March 4, 2013Andhra Pradesh which is the largest southern Indian state has seen a good response to its tender for 900 MW of solar capacity. The state is using the tried and tested solution of reverse auction to promote solar energy in the state. Indian states particularly the southern ones are heavily power deficient with industries leaving the state due to lack of power. Thermal plants have run into huge time and cost delays, due to problems in procurement of fuel as environmental issues. Solar Energy is environment friendly and also can be set up quickly. More importantly it does not need fossil fuel which India does not have.
Other states like Gujarat and Tamil Nadu have also held successful subsidy schemes. TN is already implementing a scheme to boost solar energy by ~1 GW a year. Andhra Pradesh looks like it will manage to successfully follow the examples of others. The prices of the solar bids were to be known in March. Reverse auctions have led to sharper fall in solar energy power prices and current expectations are for bids as low as ~11c/kwh. This is a huge fall from the ~20c/kwh solar prices seen in the JNNSM solar auction 3 years ago. At that time this 20c/kwh had surprised analysts for being too low. The continuous solar panel price declines have made even these super low price fall by another ~50%, thanks to the Chinese manufacturing juggernaut.
Andhra Pradesh Solar Policy
AP had earlier announced a solar policy in which it had given a number of sops such as there will be no wheeling and transmission charges for wheeling of power generated from the Solar Power Projects, to the desired location/s for captive use/ third party sale within the state through 33 KV system, subject to industries maintaining their demand within its contracted demand. Cross subsidy surcharge shall not be applicable for Open Access obtained for third party sale within the state subject to the industries maintaining their demand within its contracted demand with the DISCOMs.
All Solar Power projects will be exempted from paying Electricity Duty for captive consumption and third party sale within the state. All projects developed with the above incentives will also be eligible for REC benefits. Deemed injection into the grid for in-house captive solar generation plant (in the same premises) will be considered for issue of REC. Solar projects will get refunds on value-added tax paid for equipment and on land duty and registration charges for sites. Fast Track Approval Process permits to build grid connections within 21 days. These incentives will be in force for a period of seven years from the date of implementation. New and Renewable Energy Development Corporation of A.P. Ltd (NREDCAP) shall be the State Govt. Nodal Agency for clearance, facilitation and implementation of the proposed Solar Power Policy. These incentives will be available for 7 years for solar power plant developers building a solar panel plant till June 2014.
The Policy has been tweaked now with the government giving out solar power plants using a reverse auction tender for 1160 MW to make the process more transparent.
Read more about Solar Panels in India – Complete Guide on Buying Low Cost PV Panels.
1160 MW Andhra Pradesh Solar Tender – Highlights
1) Tender submission date is January 19, 2013 – Close to the last dates of submission of solar tender in TN which will lead to complexity and confusion. I think this could have been avoided but collaboration between different arms of the governments in India is non-existent.
2) Nodal Agency is APTransco – The state owned transmission and distribution company APTrasco will be the nodal agency responsible for the entire process of tender opening, awarding and execution. The agency has already allocated transmission capacity by reservicing substations. This is a good move as evacuation of solar energy to the power grid is a major headache for solar developers.
3) Size of the Solar Power Plant – Solar energy ground plants can be built in minimum 1 MW and maximum 20 MW.
4) Technology – There is no difference in the price being given for different solar technologies. This means that the expensive solar thermal technology is effectively out of the race.
5) PPA Term – The winning solar developer will get a Power Purchasing Agreement for 25 years.
More DETAILS
1) Capacity – Selection of Solar power projects in Andhra Pradesh under competitive bidding route for a capacity about 1,000 MW is as per the AP Solar State Policy.
2) Net worth – The net worth of the bidder should be equal to or greater than the value calculated at the rate of Rs 1 Crore per MW.
3) Technical – The bidder shall deploy commercially established solar PV/STP technology.
4) Lowest Bid Price will have to be matched – Selection of eligible bidders will be based on least quoted price per commercial unit of electricity.
Andhra Solar Energy Policy Problems
1) Solar Power Purchase price too low – There are number of issues that have already cropped up with the solar energy policy. The state owned power generation company AP Genco has decided not to bid even for a single MW blaming the subsidy price for buying solar power as too low. The generation company says that the price of 12-14c/ Kwh will not allow decent returns.
2) Lack of clarity on timely payments – This is another problem faced by all power producers (fossil fuel and renewable alike). Most of the distribution utilities in the country are bankrupt due to the crazy uneconomic policies followed by the state government . Getting money from them becomes a tough game as wind power developers in TN will attest too.
3) High processing costs – The solar developers are also finding problems for the high processing costs being charged by APTransco.
4) Differential tariffs depending on region – The state wants to give different feed in tariffs depending on the location’s solar insolation. This is a good measure in my view which should be followed by all governments. However solar developers unaccustomed to differential geographic tariffs are finding faults.
You can get more details about the solar policy and tenders.
Tamil Nadu Solar Energy Policy Review and Analysis
Title and Enforcement
This policy will be known as the “Tamil Nadu Solar Energy Policy – 2012”. The Government of Tamil Nadu will undertake a review of this Policy as and when required in view of any technological breakthrough or any changes taking place in the policy at the National level.
Key Objectives
- To project Tamil Nadu as a Solar Hub
- To generate 3000 MW of Solar Energy by 2015
- To achieve grid parity by 2015
- To encourage indigenous solar manufacturing facilities in the State
Development of Solar Power in Tamil Nadu
Phase (2013-2015) Target (MW)
2013 1000
2014 1000
2015 1000
Total (by 2015) 3000
With average solar incidence of 5.5-6 kWh/m2/day, Tamil Nadu is amongst the states with the highest solar insolation in India. To retain its leadership position, Tamil Nadu will promote setting up solar power projects to the extent of 3000 MW over a period of 3 years, as furnished above.
Tamil Nadu will actively promote the solar energy sector by prescribing a certain percentage of electricity consumption through solar energy as mandatory. This will be progressively increased.
Solar Purchase Obligation (SPO)
The State will mandate 6% SPO (starting with 3% till December 2013 and 6% from January 2014) for the following category of consumers:
HT Consumers (HT Tariff I to V)
This category will cover all HT consumers including:
- Special Economic Zones (SEZs)
- Industries guaranteed with 24/7 power supply
- IT Parks, Telecom Towers
- All Colleges & Residential Schools
- Buildings with a built up area of 20,000 sq.m or more
The SPO will be administered by TANGEDCO.
The above obligated consumers may fulfill their SPO by
- Generating captive Solar Power in Tamil Nadu equivalent to or more than their SPO
- Buying equivalent to or more than their SPO from other third party developers of Solar Power projects in Tamil Nadu
- Buying RECs generated by Solar Power projects in Tamil Nadu equivalent to or more than their SPO
- Purchasing power from TANGEDCO at Solar Tariff
- Consumers desirous of availing SPO exemption by captive solar generation shall necessarily install separate meters to measure captive generation
This mechanism will require generation of 1000 MW by 2015.
Mechanism to generate 3000 MW by 2015
The 3000 MW of Solar Power will be achieved through Utility Scale Projects, Rooftops, and under REC mechanism as follows:
| Utility Scale (MW) | Solar Roof Tops (MW) | REC (MW) | Total (MW) | |
| (a) | (b) | (c) | a + b +c | |
| 2013 | 750 | 100 | 150 | 1000 |
| 2014 | 550 | 125 | 325 | 1000 |
| 2015 | 125 | 125 | 675 | 1000 |
| Total | 1500 | 350 | 1150 | 3000 |
In utility scale out of 1500 MW, 1000 MW will be funded through SPO and balance 500 MW through Generation Based Incentive (GBI) provided by the Government.
The Andhra Pradesh Government has received more than 180 bids for setting up solar photovoltaic power plants in the State. On the extended date for solar bids, which ended at 3 pm on Saturday, it is learnt that the response was good. However, the details of the participants and the prices they have quoted will be known later when the bid documents submitted by the participants are scrutinised.
The price quotes will be known on March 1 when the bids are processed. There was indication that the bids could be for projects with total capacity of about 900 MW. Following the State Government solar policy, AP Transco, which was appointed the nodal agency for the solar photovoltaic power project implementation, had invited bids to set up a capacity of about 1,000 MW in the State. It is proposed to set up these power projects within one year.