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Solar energy auction flops for the second time in a month

If developers are to be believed, the setting of a tariff ceiling by SECI has played a spoilsport in the bidding game

New Delhi: The government’s efforts to improve green energy capacity and auction 1,200-MW ‘hybrid’ projects was met with a cold shoulder by bidders yet again, forcing the Solar Energy Corporation of India (SECI) to extend the deadline for the fifth time on October 27.

Snubbed twice in a month

This was the second renewable project auction that failed to attract takers in a month, despite the fact that the tender had been halved from 2,500 MW. If this continues, it could deal a blow to the government’s plan of installing 175 GW (gigawatt) renewable energy capacity by 2022. The tender for the hybrid projects, which includes housing wind and solar power units at the same site, has now been extended till November 14. Last time too, the absence of bidders had forced SECI to extend the deadline for the fifth time till November 12, a day before its close date on September 12. The tender invited bids for setting up of 10 GW solar power projects.

Uncertainty looms large

Frequent extension of deadlines and reduction of tender size has created a sense of uncertainty among domestic players and is making foreign investors wary, industry experts have said. The ministry’s allegations of cartelisation by bidders has also dampened the mood of the investors.

Why has the auction failed to attract takers?

If developers are to be believed, the setting of a tariff ceiling by SECI (Rs 2.60 a unit for the hybrid projects) has played a spoilsport in the bidding game. They said that capping of the tariff in competitive bidding turns investments unviable and the government should let competition, wind density and solar irradiance determine tariffs. According to developers, this doesn’t work for them. They pointed to the tariff of Rs 2.76 that was discovered at a recent SECI bid for wind power projects because promoters were forced to bid with Category B or lower quality land since there was no land available under Category A ‘wind density.’ Because the same applies to hybrid projects, the tariff ceiling is unviable. Solar tenders, on the other hand, have failed to elicit bids because of the safeguard duty imposed by the government recently and the subsequent decision to allow promoters to pass the impact on to consumers while setting a tariff ceiling.