Indian State of Tamil Nadu Plans 1.5 Gigawatt Solar Tender

Photo-illustration: Pixabay

The power utility of India’s Tamil Nadu state will yet again try its luck at auctioning large-scale solar power projects after it failed to draw interest miserably in the last two auctions.

Tamil Nadu Generation and Distribution Corporation (TANGEDCO) it set to auction 1.5 gigawatts of solar power capacity. Prospective projects developers can bid for project sizes of one to 500 megawatts.

The maximum tariff bid allowed will be Rs 4.00/kWh. This threshold tariff is 64% higher than the current lowest solar power tariff in India of Rs 2.44/kWh.

The latest auction is not expected to breach this lowest tariff price. TANGEDCO is not among the best buyers of renewable energy and has been known to default on monthly payments to project developers. Additionally, project developers in Tamil Nadu face frequent issues of non-availability of transmission infrastructure and are thus forced to shutdown their projects which leads to revenue loss.

TANGEDCO had offered 500 megawatts of solar power capacity in February 2016, but received bids for just 177 megawatts. The utility put 500 megawatts of capacity on the block again in November 2016 but received bids for only 300 megawatts.

Now, TANGEDCO is taking extra measures to ensure bidders are attracted towards the latest tender. The utility is offering 24 months to project developers to commission projects of size exceeding 50 megawatts; this is the longest time ever given to commission solar PV power projects in India. Project developers will also be compensated in case of unavailability of transmission infrastructure.

Tamil Nadu has very ambitious solar power targets, but infrastructure support remains an issue.

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.