Economic Times: December, 2016
Kolkata: SECI’s (Solar Energy Corporation of India) tender for development of 1,000 MW rooftop solar units on state-owned buildings is expected to bring down tariffs to record lows since they would expand the market and would also receive capital subsidies of up to 35-90% indicated Bridge to India.
It is the largest such tender in India’s fledgling rooftop solar market. 700 MW of capacity is proposed to be allocated under the operating expense model route, in which project developers shall fund and own the solar systems and sell power to the respective government departments under a 25-year power purchase agreement. Balance 300 MW is proposed to be set up under the capital expenditure route where the government department would set up the units.
Bidding shall be conducted on a state-by-state basis and all bidders will be expected to match the lowest bid (L1) for the respective states.
“Government customer will play a crucial role in scaling up of the rooftop solar market in India as various central government departments and agencies have made commitments to install aggregate rooftop solar capacity of 6 GW for internal consumption,” said Vinay Rustagi, managing director at Bridge to India. “A majority of systems under this tender are likely to be installed on educational and training institutes; with capital subsidies of up to 35-90% available as part of this tender, we expect project costs and tariffs to reach record lows.”
Various departments and ministries under central government have collectively committed to deploying 5,938 MW of rooftop solar capacity for their internal power consumption.
SECI is aggregating demand for a part of this requirement and helping in procuring rooftop solar systems. It has already identified suitable rooftops with the potential to install at least 1,000 MW solar capacity.
Buildings under the ministry of human resources and development account for over 70% of the identified capacity. This means that most of the systems are likely to be installed on educational and training institutes.
Gujarat accounts for 267 MW of identified capacity, followed by Uttar Pradesh (62 MW), Maharashtra (50 MW), Delhi (46 MW) and Telangana (44 MW).
Bidders are expected to sign power purchase agreements and engineering procurement contracts within six months and complete construction within 15 months after the award date.
SECI shall provide a capital subsidy of 35-90% of total capital cost ranging from Rs 18,750 (USD 277)/ per unit for general category states and rs 45,000 (USD 665)/per unit for special category states.
In a departure from previous such tenders, the subsidy amount shall be substantially reduced in the event of delays in construction time-table.
Bridge to India expects a very enthusiastic response to the tender both from rooftop solar specialists and utility solar players. In the last 500 MW rooftop solar tender by SECI, tariffs dropped to an all-time low of Rs 3 (US¢ 4.4)/ per unit for special category states on the back of a significant capital subsidy. We expect tariffs under this tender to fall even lower for special category states as buildings have already been identified and government off-take is more bankable than private sector offtake.
“This tender provides a great opportunity for scaling up of Indian rooftop solar market, which has a total installed capacity of only 1,020 MW as of September 2016, or about 10% of total installed solar capacity in the country. Read our blog from last month to understand how we expect the government customer segment to become a key demand driver for rooftop solar market in India,” said Rustagi.