In India, the central and local governments have launched numerous tenders for large-scale solar projects in order to accelerate the development of the domestic solar industry. A few years ago, Andhra Pradesh Green Energy, which is a joint venture of the government of the Indian state of Andhra Pradesh and the central government of India, issued a huge package of solar tenders that amounted to 6.4GW. The review of the bids for these tenders finally concluded this February, and the results show that Adani Green Energy won five project tenders each with a generation capacity of 600MW. Hence, Adani managed to capture nearly half of the total capacity that was allotted. The prices (or feed-in tariffs) that it offered for the winning bids were in the range of INR 2.49-2.58 per kWh. Adani Green Energy is a subsidiary of Indian multinational conglomerate Adani Group.
There were four other tier-1 bid winners in addition to Adani. They were NTPC, Shirdi Sai Electricals, Torrent Power, and HES Infra. Adani secured the development right to five solar parks that individually have a generation capacity of 600MW. Also, among the bid winners, Adani offered the highest price at INR 2.58 per kWh, which was for the bid on CS Puram Ultra Mega Solar Park.
Torrent had the lowest price at INR 2.47 per kWh, but it only captured one 600MW project. State-owned NTPC, too, captured just one 600MW project with the price of INR 2.48 per kWh, which was the second lowest. Even though Adani offered prices in the higher end of the range, it grabbed almost half of the total generation capacity that was awarded.
The tendering process did not proceed as smoothly as expected. Earlier, Tata Power Renewable Energy had filed an injunction to stop Andhra Pradesh Green Energy from signing PPAs with the bid winners. Tata charged that the auction did not follow the guidelines under the Electricity Act that was passed by the Indian Parliament in 2003. According to reports from Indian media outlets, whether the state government can actually award the generation capacity to the bid winners will depend on the upcoming decision from the High Court of Andhra Pradesh.
Disputes and renegotiations over PPAs between state governments and developers of renewable energy projects have grown in number over the recent years. As a result, bid prices for solar tenders have been pushed down significantly. The results of the 6.4GW solar tenders in Andhra Pradesh reflect this trend. Indian media outlets have reported that foreign project developers and domestic project developers backed by foreign investors are now showing some hesitation in participating government tenders. The Hindu BusinessLine mentioned that bid prices for solar tenders in India have reached a low of INR 1.99 per kWh. However, very few project developers can offer prices like this. The winning bids for the 6.4GW solar tenders further indicate that the acceptable range is much higher for the current crop of bidders.
Saur News Bureau also pointed out that the government of Andhra Pradesh sees the number of tender participants and the quality of bids as matters of credibility and prestige.
The state government is prepared to lease its land to project developers at an annual rate of INR 5 per acre. Most of the lands that will be taken up by upcoming solar projects in Andhra Pradesh are government-own lands. The remaining lands are either privately owned or specially assigned lands, and leasing them will cost the state government INR 25,000 per acre annually. The 6.4GW capacity is spread out across 10 solar parks. Saur News Bureau said that the capacity utilization factor that is demanded from the bid winners is 18% during the implementation of the PPA.
The state government has not been able to effectively lower prices. The prices resulted from the 6.4GW solar tenders are actually higher than the feed-in tariffs that were agreed upon a few years ago for some solar projects in the country. Nevertheless, the 6.4GW solar tenders have yielded the lowest prices yet for projects in Andhra Pradesh.
A total of 24 bids were submitted by five project developers for the 6.4GW solar tenders in Andhra Pradesh. Indian media outlets have also reported that the generation capacity of each bid is either 300MW at minimum or multiples thereof. Adani led the pack in terms of bid capacity, followed by Shirdi Sai, NTPC, Torrent, and HES Infra.
