Mercom Capital: India must get on track with PV auction process

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Several obstacles to the installation of new solar power generating capacity in India must be overcome if the government’s ambitious renewable energy plans are to stay on track, according to Raj Prabhu, chief executive officer at clean energy consultancy and communications firm Mercom.

The latest phase of India’s solar power installation programme, the Jawaharlal Nehru National Solar Mission (JNNSM) is expected to implement solar power capacity over phases with the current phase ending in 2013 and the next phase taking place from 2013 until 2017. The ultimate aim is for solar power generation capacity to reach 22GW by 2020.

A reverse auction has been expected to take place since the Indian Ministry of New and Renewable Energy (MNRE) announced a new tender process in late April of this year. Around 750MW of PV power generation capacity is expected to be put up for tender, with the developer offering the lowest bid price to be given a grant for up to 30% of the cost of building the plant.

Various reports have surfaced, including an interview conducted by Bloomberg New Energy Finance with MNRE joint-secretary Tarun Kapoor in which he stated that subject to cabinet approval, the tender process could take place as soon as mid-October, while on the other hand forthcoming state assembly elections could put the date back as far as December.

Prabhu told PV-Tech: “Delays are not conducive to investment – investors don’t like uncertainty. What happens next? It is uncertain when the next phases will arrive. Government transparency for the process is needed and visibility in the market is very unclear”.

Prabhu said that Mercom Capital had spoken to the MNRE often to enquire when bidding would take place but despite being given solid dates by the ministry, delays nonetheless kept occurring. He says that it would be important both symbolically and practically for the Indian PV industry for the process to take place before December, keeping in line with commitments to install the 750MW phase by the end of the year and moving to the 2013 to 2017 phase successfully.

According to Prabhu, the lack of available capital made it understandable that developers would be enticed toward bidding for a guaranteed grant to make up the shortfall in building costs rather than applying under a Feed-in Tariff. However, this carries the risk that combined with a reverse auction system, developers lacking the requisite technical expertise and budget for quality materials and labour could put forward quotes that looked unfeasibly low on paper in order to win tenders. It also took away incentives for continued good performance, he said.

This type of bidding process, known as ‘viability gap funding’, is common in Indian infrastructure projects in other industries. However this model of Public Private Partnership (PPP) is thus far untried in the solar power sector. “We [Mercom Capital] question this ‘viability gap funding’ system as it has not typically worked so well in infrastructure projects [in other sectors]. Following an upfront payment, the developer has less incentive to care,” said Prabhu.

Along with the aforementioned points, Prabhu raised the particular concern that there are no requirements for developers entering the bidding process to have technical expertise in PV development.

A domestic content requirement was also stipulated in the tender document, however, as the anti-dumping controversy rolled on in the wake of the EU-China trade war, there was still no established rules as to exactly what percentage or ratio of parts and labour used in PV systems had to be domestically sourced.

Prabhu said that to call the new system an “experiment” may be going too far, but that he would personally prefer to see efforts instead being made to make the market more conducive to investment and more investor-friendly, citing the example of Germany, where a gradual Feed-in Tariff degression by increments has been used to try and stabilise the market.

21 September 2021
C&I consumers currently source only about 7% of their power requirement directly from renewables. Indian corporate renewable market has grown rapidly and holds huge growth potential as companies look to reduce power purchase costs and cut carbon emissions. BRIDGE TO INDIA has built significant expertise in the corporate renewable business by working on over 30 consulting assignments and various research reports. We are organizing this conference to bring all stakeholders together and delve deeper into various market aspects. The conference will be held on a virtual platform with excellent networking opportunities for all participants.
22 September 2021
To commemorate the World Energy Storage Day(WESD) on 22 September, being recognized worldwide, Customized Energy Solutions (CES) and India Energy Storage Alliance (IESA) is organising the 5th global conference and virtual expo, which will be held virtually on 22 September 2021. WESD is a global movement initiated by various apex trade bodies working to promote and adopt energy storage, e-mobility & green hydrogen technologies for a sustainable future. The forthcoming edition of WESD is expected to attract global participation with an intent to facilitate bi-lateral trade, market development and new research and innovation, which will invite 100+ countries, 100+ regulators & policy makers, 100+ International speakers,1000+ organisations, 100+ partners & exhibitors and 20,000+ global delegates.
28 September 2021
Solar Solutions International is the largest trade show for solar energy in Northwest Europe. Now the solar market has grown up, it's time for the next step. Solar Solutions International displays more than 500 innovations and over 100 practical seminars concerning the latest in energy storage, smart products, and an ever evolving array of solar panels. As an exclusively B2B trade show, Solar Solutions International offers both exhibitors and visitors the chance to network at the highest level. Duurzaam Verwarmd, the largest trade show for sustainable HVAC technology in the Benelux, is held simultaneously. This way your one visit gets you up to date with all of the developments in both sustainable energy and heating.
6 October 2021
Intersolar Europe is the world’s leading exhibition for the solar industry. It takes place as part of The smarter E Europe – the continent’s largest platform for the energy industry. Under the motto “Connecting solar business,” manufacturers, suppliers, distributors, service providers and project planners and developers from around the world meet in Munich every year to discuss the latest developments and trends, explore innovations firsthand and meet potential new customers.
6 October 2021
The future is bright for a new era of US solar and storage, and the 8th annual Solar & Storage Finance Summit will provide opportunities to discuss solutions to the industry’s challenges and provide a networking platform designed to bring together the top minds in the industry to do business. With a mix of high-level, informative presentations and panels, a stellar cast of speakers and audience members with deal-making capacity, the 2021 edition of the event will be a sell-out success.
18 October 2021
Intersolar South America, South America’s largest exhibition and conference for the solar industry, takes place at the Expo Center Norte in São Paulo, Brazil on October 18–20, 2021, and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. At the accompanying Intersolar South America Conference, renowned experts shed light on hot topics in the solar industry.

Read Next

PV Tech Premium
September 21, 2021
Pressures on PV plant performance have led the solar industry to be more demanding and forensic of the data operational projects generate, as well as the power. Jules Scully explores the growing role software is playing in the utility-scale solar arena and how it must evolve further still to meet expectations.
September 21, 2021
A round-up of the latest news from the US PV sector, including project developments from Ørsted, Candela Renewables and CEP Renewables.
September 21, 2021
New York’s governor has proposed an expansion of the NY-Sun distributed solar incentive programme and revealed plans for two transmission projects that will transport renewable energy to New York City to help the state reach 70% renewable electricity by 2030.
September 21, 2021
German solar installer Enpal has raised €345 million (US$405 million) in debt financing to fund the deployment of more than 15,000 household solar PV systems
September 21, 2021
India added 521MW of rooftop solar in Q2 2021, an increase of 517% compared to the 85MW added in the same quarter last year despite a slight increase in costs, according to a Mercom India report.
September 21, 2021
Private equity firm American Securities has secured a deal to acquire US solar engineering, procurement and construction (EPC) provider Swinerton Renewable Energy and its operations and maintenance (O&M) subsidiary SOLV from Swinerton Incorporated.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
Solar Media Events
December 1, 2021