Solar power plant tender proposal stirs up a storm

Move restricts potential to 80 MW, say private players

The Karnataka Renewable Energy Development Limited (KREDL) released an RPF inviting tenders for setting up a 80-MW of solar thermal and solar photovoltiac projects in accordance with the State’s renewable energy policy to make capacity additions of 126 MW of solar power in the next five years.

The power purchase agreement (PPA) tariff fixed by KREDL quotes Rs 14.50 for a unit of electricity. This is the amount fixed by the Karnataka Electricity Regulatory Commission (KERC). The bids for the projects close on November 24.

However, the Solar Power Project Developers Association of Karnataka have objected to the tender process stating that there was a vast potential for development of solar power projects to the tune of 7000 MW in Karnataka.

“When this is the case, why is the government restricting the development of the solar power projects to only 80MW and depriving the opportunities to developers in getting solar power in a big way,” asks the president of the Association M M Bhat.

Power developers also allege that the potential is being limited to only 80MW to favour select players in the market who are politically connected.

“It is clear that KREDL and the Energy Department want to handpick select business houses. And though the normal period of PPAs in other projects like wind, hydro and biomass units is only for 10 years, it is twenty-five years for solar power plants. This is clearly a case of bias,” alleged a developer who did not want to be named.

While representations have already been made to the chief minister, smaller developers of solar power allege clear favouritism in the conditions set by KREDL stating that they cannot be managed by smaller players. “The bidder has to submit a bank guarantee of Rs 7.5 crore for an application.

The bidder will also have to supply a performance guarantee of Rs 30 lakh per MW. In addition, another Rs 20 lakh per MW will have to be submitted as bid security. This is extremely unreasonable and will make the tender process accessible only to a select few,” the developer said.

The developers are also sceptical about the paying capacity of escoms (with the tariff of Rs 14.50 a unit).

With the escoms already reeling under the impact of unpaid bills by the State due to supply of free power to  irrigation pumpsets, developers are sceptical about how they will be able to pay on time. “The financial burden is already heavy and they are not known to pay on time to wind and hydro projects. After such heavy investment, what is the guarantee they will pay on time?” questioned the developer.