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Monday, 03 Feb 2014
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JNNSM Phase-II solar auction gets strong response from promoters

 

The Jawaharlal Nehru National Solar Mission (JNNSM) Phase-II, Batch-I auction has received an overwhelming response from domestic and foreign solar project promoters. This Phase-II, Batch-I auction of 750 MW capacity is India’s first national auction of photovoltaic (PV) licenses, after a gap of two years.

 

JNNSM Phase-II solar auction gets strong response from promoters

 

Solar Energy Corporation of India (SECI), which is implementing the JNNSM Phase-II, Batch-I auction, has received 68 bids, proposing 122 solar projects of 2,170 MW. This is almost thrice the allocation target of 750 MW.

 

The bidding process under this scheme was divided into two parts - 375 MW was on ‘domestic content requirement (DCR)’ route and the other 375 MW was under the ‘open’ category. Under DCR, developers will have to use locally made equipment, while the open category has no such restriction.

 

Promoters clearly showed a preference for the ‘open’ category, with as many as 86 project proposals worth 1,470 MW being submitted under the category. The DCR category received 36 project proposals amounting to 700 MW.

 

Azure Power bid for the full 200 MW allowed, with 100 MW in each category, while Acme is reported to have bid for 200 MW through different companies. Other top bidders include Welspun Renewables Energy which bid for 160 MW of capacity; IL&FS and SunEdison which both bid for 150 MW.

 

State-owned power companies in Gujarat, Karnataka, Orissa and West Bengal also took part in the auction. Most of the PV bids were in the 10-20 MW range.

 

Solar Energy Corp will evaluate technical bids first and open the financial bids by the end of February after the initial evaluation is finished. The second auction of 1,000 MW for JNNSM Phase-II is expected to be undertaken in May 2014.

 

Guidelines for JNNSM Phase-II Batch-I

 

The overwhelming response from promoters for JNNSM Phase-II, Batch-I is mainly because for the first time, India is offering capital grants or Viability Gap Funding (VGF) that will allow developers to produce power more cheaply.

 

The government is set to provide as much as Rs 1,875 crore in grants for the projects, which will reduce construction costs, allowing the winning developers to sell the electricity they generate at about the same price as conventional power.

 

As per the guidelines approved by the Ministry of New and Renewable Energy (MNRE), the winning projects will be given the VGF, which has to be requested by the Project Developer, at the time of bidding. The maximum VGF a bidder can request is 30 per cent of the project cost or Rs 2.5 crore/MW, whichever is lower, as long as they funded at least Rs 15 million/MW themselves. Winning bidders will be those who ask for the least amount of funding for selling their power at a fixed tariff to SECI.

 

The guidelines also include a 50 per cent DCR, which stipulates that half of the projects – 375 MW – must feature cells and modules manufactured in India.

 

The selected project developers will be required to submit all the necessary documents to the SECI following which the SECI will sign a Power Purchase Agreement (PPA) with the developer, which will be valid for 25 years.

 

Under the PPA, developers will be paid Rs 5.45/kWh by SECI with the power then being sold on to state distribution companies by SECI for Rs 5.50/kWh.

 

The project developer will get 210 days from the date of signing the PPA to achieve financial closure. The deadline for commissioning of the plant will be 13 months from the date of signing the PPA.

 

The ownership of developer companies cannot change between the signing of a PPA and one year after energy starts being supplied. This is to prevent foreign companies buying up the controlling interests in Indian developers to gain back door entry to the Indian market.

 

Overview

 

JNNSM was launched in 2010, under the National Action Plan on Climate Change (NAPCC) with a target of setting up 20,000 MW of grid-connected solar power capacity by 2022 in three phases. Since the launch, India’s solar power capacity has shot up from a meagre 17.8 MW to more than 2,000 MW. One of the key factors which helped in expanding the capacity is the rapid fall in the cost per unit of solar electricity, which currently stands at around Rs seven, down from Rs 18 in 2010.

 

For the next stage of expansion several solar projects are under way in the states of Rajasthan, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Tamil Nadu. The Charanka Solar Park in Gujarat is currently Asia's biggest solar plant, producing 214 MW.

 

India is also in the process of setting up the world's largest solar plant to generate 4,000 MW in Rajasthan. This is expected to drive solar power costs even lower.

 

Greater economies of scale, better technology and progressively cheaper panels and modules have helped in bringing down the price of solar power. However, the long term goal is to bring down the cost per unit of solar electricity close to what is known as "grid parity" - the cost of conventional electricity generated by carbon-gas emitting coal.

 

India has tremendous opportunity in the solar power sector because of its abundant sunshine. Moving towards new solar energy projects by making the infrastructure more affordable will help in harnessing this resource.

 

Manufacturing Sector Developments

 

 
  • Karnataka Govt. has inked an MoU for setting up of a rail coach factory
  • Diamond Power Infrastructure has commissioned Phase-I of cable and conductors' facilities in Gujarat
  • Isuzu Motors laid the foundation stone for its greenfield manufacturing unit in the Sri City
  • Gujarat Govt. has approved as many as seven projects worth Rs 15,000 crore
  • Karnataka state high level clearance committee has cleared several investment proposals

 

Infrastructure Sector Developments

 

 

 

Power Sector Developments

 

 

 

FDI Developments

 

 
  • DIPP has revised a proposal for 100 per cent FDI in railways

 

Quote of the week:

 

Dr Farooq Abdullah  
"India has set a target of generation of 10,000 MW of power through solar energy by the year 2017...the Phase I of the Jawaharlal Nehru National Solar Mission has been very successful wherein 1685 MW of solar power was generated as against the target of 1100 MW"

Dr Farooq Abdullah,
Minster of New and Renewable Energy
 
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