India delays solar auction for second time

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The Solar Energy Corporation of India (SECI) has delayed a 750MW national solar power auction for a second time.

The deadline for the submission of solar project proposals has been moved from 28 December, to 20 January.

The auction had already been moved from 29 November 2013 and the repeated delays have caused concern amongst solar developers and investors in India.

The auction is part of the second phase of India’s national solar mission (JNNSM), which is aiming for 20GW of installed solar by 2022. It will use a reverse bidding process, under which the lowest project bids win, with ‘viability gap funding’ (VGF) available to cover up to 30% of a project’s costs.

But following concerns expressed by developers that state utility companies may not be able to pay for the power produced by solar projects, SECI has agreed to delay auction.

In an attempt to reassure developers the body has also published clarifications on its role and abilities to fund solar projects, including rights to take over from developers to fund and assist flailing projects. According to SECI, more amendments are to be published soon.

Talking to PV Tech, solar consultant in India, Ritesh Pothan, said the VGF mechanism would lead to “bad competition and bad projects”.

The race for developers to utilise government funding to create cheap solar projects is “squeezing the market and prices are not stable”, said Ritesh, predicting there is going to be “a lot of crazy bids” on the 20 January, as developers are “pressured into” bidding due to a lack of alternative funding.

He said the bankability of state utilities was “a major dampener for investors”.

The auction, announced on 28 October on a ‘Build Own Operate’ basis for 25-year power purchase is split into two sections; 375MW has a domestic content requirement (DCR), requiring all solar cells and modules to be manufactured in India, while the remaining 375MW has no requirement for developers.

Following the delay, PPAs are now expected to be signed in April 2014, with the project completion deadline to be in May 2015.

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