Friday, November 23, 2012

Tamil Nadu Solar Policy Bidding for 1000 MW –TANGEDCO Consultation Meeting

A fairly hectic consultation meeting happened yesterday at TANGEDCO (TNEB) yday for bidding for 1000 MW of solar projects in TN.
Crowd was amazing, something on lines one would have expected for a top-line movie premiere- so much that the folks there had to arrange for two sessions instead of one, as originally planned
(Talking of movies, there was every likelihood that the TANGEDCO chairman would have been mobbed much more than a Kollywood superstar if one were present there. The TNEB HQ itself looked like a movie theater, and in a rather cinematic coincidence I even met a top honcho from the Satyam Cinemas attending the meeting!).
Key takeaways
1. Tender for bidding for 1000 MW will be out in a week
2. 360 days from the time of tender , they are looking at 1000 MW being operational.
3. Minimum 1 MW, no upper limit (NO UPPER LIMIT? Yep, that’s what the TANGEDCO CMD re-re-repeated)
4. 20 year PPA (and not 25?)
5. A rather interesting way to bid. You bid for a price that will be increased by 5% every (compounded) year until the 10th year. The price will remain the same as the 10th year price for years 11-20.
Everyone bids, and based on the lowest bid price, TANGEDCO will fix a common price for all allottees.
(A bit confusing over here on what that actual price will be – will it be the lowest price or an average? Also, the exact process of allotment is not clear, will it be a 2-step process, if TANGEDCO fixes the price based on first bids? Isn’t there a chance that I would like to back out if the price TANGEDCO fixes after the bids were submitted is lower than what I had bid for and I don’t wish to go lower? How does this process accommodate this?)
6. Payment security through LC (this should bring a sigh of relief from most folks)
7. TANGEDCO will ensure that evacuation facilities are not a problem – in fact, he read out the additional capacities available in each TN district and it came to 1110 MW, so I presume that is the math they are working with. (Those who wish to know the evacuation capacities available in the various districts can get these data from Chief Engineer, Non Conventional Sources, TANGEDCO)
8. Minimum net worth for bidder – 1 Cr/MW
9. Identifying land and putting up a dedicated feeder line are the responsibilities of the developer. TANGEDCO can put up the dedicated line, but the cost is to the developer.
10. There will be a pre-bid meeting soon after the tender is released.
OK, the above were the salient points.
Other points of interest:
  • Release of Tender Bid Document – Day 0 – Time A (0 from start)
  • Submission of Bids – Day 30 – Time B (30 from start)
  • Qualification of Eligible Bidders and LoI – Time C = Time B + 30 days  (60 from start)
  • Completion of Load Flow Studies – Time D = Time C + 30 (90 days from start)
  • Financial Closure – Time E = Time D + 30 (120 days from start, 60 days from LoI)
  • Project Completion – Time F = Time E + 240 (360 days from start, so you get 8 months for implementation)
SPO Solar Tariff and Its Relation to Bid Price
What will be the solar tariff for all those wishing to buy solar power from TANGEDCO to meet their SPO? This price will be determined based on the final contract price offered by TANGEDCO (which in turn will depend on the bid prices), and to this will be added transmission charges and other applicable costs to arrive at a final solar tariff.
Division of responsibilities between TANGEDCO & TEDA:
TANGEDCO will do the following:
  • Signing of PPA (and buying and paying for the power)
  • Letter of Credit
  • Responsible for ensuring evacuation facilities
  • Will also undertake load flow study
Rest will be taken care of TEDA.
Some key questions/concerns I and some others had in mind:
  • Lack of upper limit – doesn’t sound like a great idea – seems to go against the spirit of ensuring that a large number of aspirants participate
  • One price for all – this is different from the reverse bidding seen in other states, where I get the price I bid for. Thus, not sure how exactly how the process will work.
Other than these, the powers-that-be appear to have thought things out quite well. It was nice to see they addressing the key pain points very well, viz
  • Payment security
  • Lack of evacuation
  • Transparency of the entire process
But they surely had not thought out one point – the crowd that would gather for this. They had estimated 100, it would have been more like 400. Sign of things to come?
Wish to comment or have questions?
Do you have questions on this? Please drop these in the comments. I will make sure I will consolidate them and send it to TANGEDCO & TEDA. No, I don’t work for TEDA or TANGEDCO, but I presume they might prefer if someone consolidates and sends all the questions. 

Thursday, November 22, 2012

Power regulator puts cost of solar voltaic plants at Rs 8 cr/MW

Tariff fixed at Rs 7.87/unit
The Central Electricity Regulatory Commission has fixed the normative cost of solar photo voltaic plants as Rs 8 crore per MW of installed capacity, for the year 2013-14.
The CERC’s normative cost is generally taken as the benchmark by developers and often forms the basis for tariff negotiations. For instance, in the forthcoming meeting of the would-be investors in Tamil Nadu and the state’s electricity generation and distribution utility, TANGEDCO, which is scheduled for November 23, the CERC norm can be expected to be taken as the reference cost of solar plants.
The Commission has also taken the cost per MW of solar thermal plants at Rs 12 crore.
In calculating the normative cost of solar PV as Rs 8 crore per MW and solar thermal at Rs 12 crore per MW, CERC has decreased the cost by Rs 2 crore per MW for solar PV and Rs 1 crore for solar thermal over its normative cost for the year 2012-13.
For 2013-14, the Commission has taken Rs 7.87 per kWhr for solar PV and Rs 10.69 for solar thermal.

Tuesday, November 20, 2012

New solar policy offers Rs 21,000 cr biz opportunity

The new solar energy policy unveiled by the Tamil Nadu Government appears to offer an Rs 21,000 crore -Rs 24000 crore business opportunity and the players in the field apparently are waiting for the Government Order to specify the contours of the new policy.

What might work to the advantage of the solar power producers was not only the government insisting on sourcing of certain minimum quantity of solar power by large industrial consumers but also the fact that it would far cheaper to produce compared to the conventional sources.

Speaking at a news conference here today, R.Chellappan, Managing Director, Swelect Energy Systems Limited (SWEES- formerly known as Numeric Power Systems Ltd), Chennai, said there were two kinds of technologies that were used by the solar power industry.

The thin film technology would cost about Rs 7 crore to Rs 7.5 crore per MW. But if the investors adopted silicon (poly or mono crystalline) technology, the cost might be in the range of Rs 7.5 crore to Rs 8 crore per MW. The advantage of the latter was that it required lesser space for the same capacity compared to thin film based solar technology.

He said the Tamil Nadu Government had unveiled the new solar energy policy and the industry was waiting for the GO to be out which would commit the consumers to the Solar Purchase Obligation (SPO), category-wise. Many companies have announced their intention to grab the business opportunity offered by the policy to become Independent Power Producers (IPPs), including his company.

Depending on the technology mix the investment required to achieve a generation of 3,000 MW of solar power by 2015 in the state could be in the range of Rs 21,000 crore to Rs 24,000 crore. 

Citing the experience of Gujarat, he said that state was on the verge of reaching 1000 MW of solar power with 600 MW of it already commissioned. This was done in about two years.

He said SWEES was planning to come out with the largest solar power project in Tamil Nadu in Sivaganga District with an overall investment of Rs 85 crore- Rs 90 crore that would be funded through internal resources. The land for the project has been acquired and he expected the project to be completed by August next year.
This would be a single location, centralised, 10 MW solar installation completely grid-tied. The project would use poly crystalline panels and the cost would be nearly Rs 8.5 crore-Rs 9 crore per MW, making it the largest single location solar power project both in terms of generation capacity and investment incurred, in the state.

 He put the cost of generation of solar power at about Rs 7.5 to Rs 9 per unit compared to captive (diesel) generation that was around Rs 15.50- Rs 17 per unit and from other sources like coal or atomic power which might be around Rs 10/unit. He expected the project to achieve break even in 6-7 years. The project would be funded from the balance sheet of the company and there was `no debt component’.
He said it would take many years for Tamil Nadu to `get away from the dark situation we are into now’ and it was necessary for every type of consumer to go for energy back up solutions. For households, there were even options to run, apart from a few lights, fans and TV, air conditioner for two hours and fridge to preserve milk and medicines using solar power.

Thursday, November 8, 2012

Renewable Energy Industry Weighs In On Obama Victory

Tuesday, November 6, 2012

Solar developers make a beeline for TN

Good sunshine and chronic power shortage always made Tamil Nadu an attractive investment destination for solar power developers. Now, the State’s solar policy has further sweetened the deal by imposing an obligation on certain classes of power consumers to buy a chunk of solar power.
Industrial consumers, frustrated by long hours of power outage, are now “taking solar very seriously,” says Pasupathy Gopalan, Managing Director of SunEdison, an American.
SunEdison is among the companies that are keen on developing solar projects in the State Most developers prefer to sell power directly to industrial consumers, who luckily for them are mandated to buy solar power under the State-imposed solar purchase obligations. Only NanoPV-Voltech, perhaps because the Indian partner already has business links with Tangedco.


Zynergy’s Managing Director & CEO Rohit Rabindernath finds tariff discovered through ‘reverse bidding’ un-remunerative. Selling to the utility at the ‘average pooled purchase cost’ (Rs 2.54 in Tamil Nadu) and getting tradable renewable energy certificates (RECs) is also not an option for him because no banker recognises REC income.
Further, selling power to Tangedco would call for some kind of payment security mechanism. Otherwise given the payment track record of the utility, no banker will lend on the basis of a PPA with Tangedco, developers say.


Selling power to paying consumers is more lucrative. Zynergy for one is confident of getting tariffs of Rs 9 and above — any income from RECs would be shared with the customer.
These project developers also have some common concerns. The first is about the enforcing solar purchase obligations, for, unless the obligations are fulfilled there would be no RECs.
The second concern is the cross-subsidy charges in Tamil Nadu (Rs 2.07 a unit for an industrial consumer and Rs 3.28 for a commercial establishment), which are levied when a generator sells power directly to a consumer.
Unless exempted from ‘cross-subsidy charges’, developers will have to get into the ‘group captive’ model to avoid the levy. This entails forming a separate company with power purchasers as shareholders. This model is messy and expensive because you need to incorporate separate companies for various projects and customers will have to invest in the equity.
However, many developers seem to be confident that the Tamil Nadu Government will exempt solar power from cross-subsidy levy.
Land availability seems not to be a big deal (unlike, say, in Rajasthan, where land ceiling law is a hurdle). In the last two decades, the wind industry has spawned a number of ‘infrastructure developers’ in the State who provide the service of buying land, organising grid connection and dealing with the local people and panchayats.
Finance, on the other hand, is seen as a challenge. Raising equity is no problem, but securing debt requires working on.
Solar developers believe that the State Government can do something here, perhaps have Tamil Nadu Industrial Investment Corporation provide easy loans.

Web portal on Indian solar market launched

India and Germany today launched a web portal to provide information to industry about opportunities in the Indian solar market.
The website,, has been developed to facilitate dissemination of information to project developers and other stakeholders on the solar market.
New and renewable energy minister Farooq Abdullah and deputy chief of the German mission Cord Meier-Klodt launched the "solar guidelines", a web-based platform.
The information on the portal envisages enabling investment and rapid development of the solar sector.
Klodt said: "Both India and Germany have to master equally ambitious challenges in their energy sectors in the years ahead.
"This is why we wish to join hands with our Indian partners in order to benefit from each other's experience, jointly seek state-of-the-art responses to those huge challenges and do business together," he said.

Monday, November 5, 2012

Tamil Nadu colleges all set to tap solar energy

CHENNAI: From powering street lamps in colleges and water heating systems in hostels to lights and fans in classrooms, solar energy is the new kid on campus in Tamil Nadu. 

In its solar policy, the state government imposes a solar purchase obligation (SPO) on colleges, mandating them to meet 6% of their power usage from solar energy, and colleges are getting down to business. 

Going by the policy, commercial establishments, colleges, government buildings, residential schools, IT parks, industries, and buildings with a built-up area of 20,000sqm come under this obligation. They can meet this by generating their own power, purchasing solar power from the state electricity board, or purchasing power from private power producers. 

"Colleges have vast expanses of land to put up solar panels. They are eligible for tax benefits. It also helps to avoid technical problems relating to transmission of power from plants to the college," said Vineeth Vijayaraghavan, an industry expert . 

Vellore-based VIT University is going beyond the 6% obligation and is planning to source solar power for 30% of its needs. The college currently uses diesel gensets for 30% of its needs and is looking to replace this with wind and solar energy. "We have a four-acre lake inside our campus and will be putting up photovoltaic modules over the lake for 2MW, replicating Gujarat's set up over the Narmada River," said founder and chancellor of VIT University G Viswanathan. The college will also have an in-house 3MW solar power plant and is negotiating with a few companies to set up the plants. 

Apart from setting up roof-top systems, Chennai-based Sri Venkateswara College of Engineering(SVCE) is planning to tap solar energy for street lighting on campus. "We had done a pilot project earlier and will expand this to other areas in phases," said college principal M Sivanandham. The college is planning to invest about Rs 7 lakh in the first phase. 

Captive consumption saves colleges from wasting power, and thereby, funds. "Setting up an off-grid roof-top system in the college will save about 8% of the power they buy from the grid. The power generated can be used for captive consumption and energy isn't wasted. Even during holidays when power usage is low, the mandated 6% will be required for basic activities in the college and the college can use its own power," an expert said. 

On the educational side, colleges will benefit as students will learn about solar energy. "Several PG students work on simulated solar projects using fictional data for their research. Having roof-top systems gives students the opportunity to work on real-time projects," Vijayaraghavan said. At SVCE, for instance, the solar street lighting project was done by students of electrical engineering, and the college will get students of other departments to work on such projects, Sivanandham said.

Saturday, November 3, 2012

Spanish company Gestamp to put up 100 MW solar plant in TN

Spanish engineering and renewables major Gestamp intends to put up a 100 MW solar photovoltaic project in Tamil Nadu, but in phases.
Southern Solar Pvt Ltd, a joint venture of Gestamp and Chennai-based Zynergy group, will put up the first 25 MW by March. Gestamp has 70 per cent stake in the joint venture. (Typically, a solar project calls for an investment of Rs 9 crore per MW.)
The joint venture has acquired 500 acres in Madurai and Ramnad districts, Rohit Rabindernath, Group MD and CEO, Zynergy, told Business Line on Thursday.
Rabindernath said that Southern Solar would prefer to sell the power it generates to industrial consumers directly.
It has signed MoUs with potential buyers for selling power from 10 MW of capacity and is in the process of negotiating the power purchase agreements with them. He said he is confident of being able to firm up PPAs for 25 MW soon, and hence the initial phase of the project would be for that capacity.
He said that evacuation of power would not be a problem because “luckily for us” there is no transmission constraints in the areas Southern Solar would put up its projects.
On the tariffs that the Southern Solar would sell electricity at, Rabindernath said that industrial consumers were fine with paying Rs 9 and above per unit. Anything less would not make economic sense for the project developers. Any benefits that Southern Solar would get from trading in the renewable energy certificates could be shared with the buyer of the electricity.
Southern Solar would not be interested in ‘reverse bidding’ projects, where the tariffs are determined in a bid process, and are often as low as around Rs 8.