MNRE removes cap on bids for renewables, industry says decision ill-timed

In order to boost investments in solar and wind power projects, the ministry of new and renewable energy (MNRE) has removed upper ceiling or tariff cap on bids. It has issued a directive to the Solar Energy Corporation of India (SECI), NTPC and state government departments.

Business Standard has reviewed the notice which was issued on Thursday.

The move comes after the industry requested the government to remove any ceiling on the bidding. Several states and SECI have a capped tariff rate, beyond which companies cannot quote while bidding for solar and wind power projects.

The tariff caps ranged from Rs 2.9 per unit by SECI in some solar power tenders in 2019 to Rs 3.5 per unit by some states such as Maharashtra, Rajasthan and Uttar Pradesh.

This led to a lot of tenders going undersubscribed or drawing no interest from the industry which found the caps to be too low. Due to the prevailing market conditions, the companies found them unviable. The lowest bid in solar and wind has been about Rs 2.4 per unit.

Some industry executives, however, called this decision ill-timed. “The industry has been asking for cap removal when market conditions favoured higher tariffs. Now when the tariff has come down, the government has removed the cap,” said a senior executive of a leading renewable company.

In a recent tender floated by SECI for 1,200 Mw of solar power plants, the tariff discovered was Rs 2.5 per unit, the lowest in the past two years. Industry executives said comparatively relaxed norms in the tender were the reason for low tariff.

In the same notice, MNRE also directed SECI, NTPC and the state power departments to procure renewable energy either through single renewable source or various combinations of renewable sources with or without storage as per their procurement policies.

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