Gujarat Urja Vikas Nigam Limited (GUVNL) has issued an innovative tender for 500MW of grid-connected solar PV projects to be developed across the state, which should draw "intense competition", according to a prominent analyst.
An extra 500MW capacity under a “greenshoe option” may be offered up to bidders who are willing to execute PPAs with GUVNL at the lowest tariff (L1 rate) from the auction, at their originally quoted capacities.
Vinay Rustagi, managing director of consultancy firm Bridge to India, told PV Tech that there are several factors that make this tender likely to draw "very high, very intense competition".
Firstly, the off-taker GUVNL enjoys the highest credit rating amongst India's utilities, while the change-in-law provision suggests that the utility will absorb the risks of any imposition of anti-dumping or safeguard duties, which have been looming threats to project developers. Rustagi said that as a result, the Gujarat tender should progress quickly, unlike many Solar Energy Corporation of India (SECI) tenders that have been held up due to uncertainty over such change-in-law provisions.
For the extra "greenshoe" 500MW, willing bidders will have to give their confirmation within a period of 10 days from the auction closing. Priority shall be given to the public sector and government organizations in their order of ranking in the e-reverse auction followed by their ranking in the initial price bids.
Rustagi said: "The provision just shows that Gujarat Discoms and the government, in general, are ahead of the curve in coming out with more innovative provisions, so I think there should be a fairly good appetite for it and I suspect the tariffs will be competitive."
He also noted that the RfP document does not mention a benchmark tariff specification. As such specifications can be restrictive in an environment where costs are going up, Rustagi said this omission should also help the tender.
The minimum project capacity shall be 25MW and a single bidder can go for the entire 500MW capacity in the first instance. GUVNL will sign 25-year power purchase agreements (PPAs) with successful bidders. The deadline for bid submissions is 19 March.
Last September, a 500MW solar auction held by GUNVL saw a surprisingly low winning bid of INR2.65/kWh (US$0.041) from Jewellery firm GRT Jewellers.
The latest major India auction held in Karnataka saw an uptick in prices, but these were for relatively small capacity projects in areas of lower irradiance than some of the preceding auctions.