Solar auction: UP does an AP, denies bidder rights

In November 2020, a tariff of Rs 2/unit was found in Seci’s photo voltaic auctions for Rajasthan.

Solar energy auctions are shedding their sanctity and builders their confidence, with Uttar Pradesh turning into the newest state to cancel successful bids with none legitimate purpose, apart from the lure of decrease tariffs found in subsequent auctions. On receipt of letter of cancellation of the bids from the Uttar Pradesh New and Renewable Power Improvement Company (UPNEDA) on Monday, the three winners of the reverse public sale held in February 2020 are planning to maneuver the appellate tribunal for electrical energy (Aptel) in opposition to the transfer. They might additionally write to the prime minister searching for his intervention to treatment the scenario.

UPNEDA wrote to 3 companies – Vijay Printing Press, NV Vogt Singapore and a consortium of Saudi Arabia-based Al Jomaih and India’s Jakson Energy – , stating that since no motion was taken by the companies after they “consented for the extension of the bid interval validity until March 31, 2021”, the bids have turn out to be “time-barred and infructuous”.

Quickly after assuming workplace in Might 2019, Andhra Pradesh chief minister YS Jaganmohan Reddy had revised the facility buy agreements (PPAs)of photo voltaic and wind initiatives price round 8,000 MW within the state although the PPAs had been signed with the companies involved by the earlier authorities. The matter is now earlier than the Amaravati Excessive Courtroom. Gujarat, too, suspended the method for allotting photo voltaic capability of 700 MW in February this yr, whereas it was obligated to signal PPAs with the winners within the auctions held earlier.

Trade sources mentioned within the newest occasion, the businesses had solely agreed to the UPNEDA’s request for extending the validity of their financial institution ensures, and so they had been on no account liable for the cancellation of the public sale. In actual fact, UPNEDA additionally acknowledged within the letter that since a lot decrease tariffs have been found in current photo voltaic auctions in different states, “it appears very seemingly {that a} recent bid might ship higher tariffs for the electrical energy customers of Uttar Pradesh…”. The company additionally provided to return financial institution ensures submitted by the businesses.

Solar energy tariffs reached a file low of Rs 1.99/unit in December 2020 below auctions held by Photo voltaic Power Company of India (Seci) in Gujarat. In November 2020, a tariff of Rs 2/unit was found in Seci’s photo voltaic auctions for Rajasthan.

Talking to FE, on the situation of anonymity, an official of the UP power division mentioned that since neither letters of intent (LoIs) have been issued nor PPAs signed with the companies, the businesses had no proper to problem the UPNEDA’s choice. “All contractual rights and obligations start as soon as the PPA has been signed,” the official mentioned. One other official, on the situation of anonymity, mentioned the true purpose behind the transfer was the decrease tariffs found in current auctions held by Rajasthan and Gujarat, and lately by UP itself.

Subrahmanyam Pulipaka, CEO at Nationwide Photo voltaic Power Federation of India (NSEFI), the umbrella physique of photo voltaic companies, mentioned the letter from UPNEDA had no rationale. “There is no such thing as a query of us giving consent for any extension of the bid. All our member corporations had been verbally communicated that due to Covid-19, the validity of the bids is being extending for one yr until March 31, 2021. There was no written communication. Furthermore, the problem shouldn’t be the bid, however the truth that no LoI had been issued (to the winners). This exhibits blatant disregard for the method” He added that, “we’re escalating the problem to PM workplace and we will certainly problem it. We are attempting to determine the technique and whether or not we should always problem the UPNEDA transfer in Aptel or UPERC or the excessive court docket or the Supreme Courtroom,” he mentioned.

Whereas Uttar Pradesh had invited bids for 500 MW of solar energy in February 2020, it obtained bids for the establishing of crops with a mixed capability of 184 MW from 4 corporations, together with the above three. One among them – SolarArise – bid for simply 9 MW and it subsequently withdrew. Al Jomaih received 100 MW capability, NV Vogt 50 MW and Vijay Printing, 25 MW.

Whereas the UP authorities expects the tariffs to be decrease in recent auctions, business executives say which may not be the case as the price of photo voltaic tools has elevated with the rise of commodity costs globally. Tariff of Rs 3.17 per unit quoted within the public sale in February 2020 itself was wanting viable any longer, they are saying. “Greater land price in Uttar Pradesh and the setting of coverage instability additionally results in greater tariffs within the state,” a photo voltaic business skilled informed on the situation of anonymity.

The UP authorities, nonetheless, is assured of receiving lower-tariff bids given the auctions concluded in Might this yr found a tariff of Rs 2.69/unit. “We had invited RFPs for growing 275 MW solar energy in March this yr, in opposition to which two builders have been chosen to arrange the 200 MW crops. On Might 17, we went forward and issued LoIs to SJVN for establishing a photo voltaic plant of 75 MW at Rs 2.68/unit at Orai, in Jalaun district, whereas REC Energy Distribution Firm will arrange a 75 MW plant at Rs 2.69/unit in Jalaun district and one other 50 MW plant at Rs 2.69/unit in Kanpur Dehat district,” the second official from the division quoted earlier mentioned.

As FE reported earlier, the photo voltaic business had written to the state’s chief minister Yogi Adityanath to expedite the issuance of the LoIs in order that the winners of the auctions might begin building of the parks. Based on the tender doc, the LoIs from the state authorities had been imagined to be launched inside three months after the completion of the auctions. Delays in approval might even result in the businesses, many backed by overseas buyers, to rethink their funding proposals within the state, the business had cautioned within the letter.

India has set a goal to lift the capability of put in renewable power era crops to 450 giga watt (GW) by 2030. Of the 143 GW of tenders floated for constructing photo voltaic capacities, since FY17, round 78 GW have been cancelled.

The present put in renewable power era capability stands at 95 GW and about 33 GW is below numerous levels of implementation whereas 30 GW is below numerous levels of bidding. Of the 40 GW of put in photo voltaic capability within the nation, Uttar Pradesh homes 1.7 GW. Trade specialists have additionally attributed administrative and regulatory roadblocks to photo voltaic tariffs being greater in UP in contrast with these in different elements of the nation.