An Indian Privately owned power distribution Company has called a tender to setup 300 MW of solar power capacity in state of Gujarat. The distribution company shall use the capacity auctioned to fulfill its Renewable Purchase Obligation (RPO).
Torrent Power, a distribution company is serving multiple cities of Gujarat, has issued the tender of 300MW of solar power from project developers. According to the tender document, the project developers shall be allocated this capacity through a reverse auction conducted online.
The project developers will have 12 months to achieve financial closure for the project, later which has to be commissioned within 9 following months. Any delay in the commissioning of the project will cause reduction of tariff at which the project was awarded. Per day delay in commissioning will be reduced by Rs 0.05 /kWh.
Torrent Power would let existing projects to take part in this tender if they have not been contracted to supply power elsewhere under a long term power purchase agreement.
Torrent Power serves the cities like Ahmedabad, Gandhinagar, Surat, Dahej SEZ and Dholera SIR in Gujarat, it is one among the private companies active in the power distribution business in India. This particular tender by Torrent Power is among the first and largest of its kind to be called by a private sector power distribution company in India.
Other private power distribution companies have to enter into direct power procurement agreements for few months or meet their RPO targets or purchase Renewable Energy Certificates. This new approach by Torrent Power is reflexive of the sharp decline in tariff bids of large-scale solar power projects in India over the last few years. The introduction of forecast and scheduling regulations in the country have given buyers confidence regarding a fairly accurate estimation of power to be supplied by solar power projects.
Similar power distribution companies like Reliance Infra-owned BSES have entered into power purchase agreements (PPA’s) with Solar Energy Corporation of India (SECI) in order to avoid direct tenders, and engagement with project developers. SECI will auction large scale solar and wind power projects across India, successful project developers will enter PPA’s with SECI, which in turn sells this power to interested power distribution companies. This prevents the headache of floating a tender and organizing an auction.