National Thermal Power Corporation Limited (NTPC), which is a company under the Indian Ministry of Power, announced in late April that it is initiating a major solar tender. According to its request for selection, NTPC is inviting solar project developers to build 1GW of PV generation capacity that will be connected to the Interstate Transmission System. These PV power plants can be built anywhere in the country.
The tender is a step forward in the implementation of the Ministry of Power’s ongoing program known as “Flexibility in Generation and Scheduling of Thermal Power Stations”. Under this scheme, power producers that have fossil-fuel power plants can build or procure renewable generation capacity to meet its electricity supply commitments, thereby achieving a reduction in both generation cost and CO2 emissions. In particular, the solar projects that will be developed under the tender will be used to provide flexibility in the scheduled generation of two major coal-fired power plants—the Solapur Super Thermal Power Station in Maharashtra and the Kudgi Super Thermal Power Station in Karnataka.
Based on the reporting by various media outlets on this solar tender, project developers will be entering a “build-own-operate-transfer” arrangement with NTPC. A bid winner will establish a wholly owned subsidiary for the construction, ownership, and operation of the PV power plant (i.e., a special purpose vehicle or SPV). Once the project is completed, NTPC will buy electricity from it under a 25-year PPA. The price is INR 1.91/kWh for the first year and then increases at the rate of INR 0.01/kWh every year until the 25th year. An important condition in this arrangement is that NTPC reserves the right to “take over” the SPV after the PV power plant completes its 5th year of commercial operation. Bidders must prepare for this potential event and offer a quote on the SPV takeover cost.
The tender is open to project developers from other countries. The deadline for bid submissions is May 27, and bidders are required provide both financial and technological proposals.
