NTPC solar tender gets weak response

NTPC solar tender gets weak response

NTPC’s invitation for bids for setting up 1,200 MW of solar generation units received a tepid response, with only one company winning bids for 300 MW. According to industry sources, Chinese government-backed TBEA Energy was the lowest bidder, quoting a tariff of Rs 2.63/unit. The company specialises in making power transformers.

The ceiling tariff for the auction was set at Rs 2.65/unit. This under-subscribed tender follows NTPC receiving no response for 1,200 MW of wind power projects earlier this week.

According to an industry representative FE spoke to, many solar developers did not evince interest after they saw that solar projects of even state-run NTPC were not spared by the Andhra Pradesh government which recently revised renewable energy tariffs. The state government has written to the company asking it to reduce tariffs for some plants supplying power to the state. A senior official of a major renewable company said on the condition of anonymity that uncertainties stemming from Andhra’s decision have led to a situation where projects despite being completely constructed are not getting commissioned, and this has reduced the confidence of the firm on NTPC.

Another senior official from a different solar company said since the ceiling tariff for similar tenders has been kept at Rs 2.78/unit, it did not make much sense to participate this particular tranche.

The largest thermal power producer of the country, which is actively increasing its renewable energy portfolio, has nearly 29% of its installed solar capacity in the state. Apart from its own green projects, NTPC acts as an aggregator of renewable energy supplying power to a number of states from solar and wind plants owned by other developers. NTPC earns a trading margin of Rs 0.07/unit from such transactions. Recently, states such as Andhra Pradesh, Punjab and Bihar have been requesting power regulators to reduce the trading margin for renewable aggregators to Rs 0.02/unit.

The country has ambitious plans of having 175 gigawatt (GW) by December 2022. The installed renewable capacity now stands at 82.6 GW. Thanks to the devaluation of the rupee, rising finance costs, government-mandated tariff caps in reverse auctions and cancellation of renewable project tenders, the pace of adding renewable generation capacities already slowed down in FY19, when the country added 8.6 GW against 11.3 GW and 11.8 GW added in FY17 and FY18, respectively.