Solar developers buy time to negotiate tariffs with Gridco

Solar power developers who finished as L2 and L3 bidders at the recently concluded auctions in Odisha, are still dithering on tariff negotiations with Gridco, the state-controlled bulk power buyer and trader.

Gridco has been nudging the L2 and L3 bidders to scale down their quotes to the L1 level. Aditya Birla Renewables had emerged as the L1 bidder in Odisha’s maiden solar auctions, quoting a price of Rs 2.79 per unit. But, the differential between L1 and the other bidders has unsettled Gridco authorities. Three players are tied at the L2 level with a quote of Rs 3.19 per unit. These are Sukhbir Agro Energy Ltd, city-based Gupta Power Infrastructure Ltd and Eden Renewable Varenne Private Ltd, which bagged 25 Mw, 20 Mw and 50 Mw capacities respectively. Acme Solar finished as the L3 bidder, quoting Rs 3.20 for 50 Mw unit.

“The L2 and L3 bidders have asked for some more time to decide on softening their quoted tariffs. They have cited headwinds like rupee depreciation and the cloud over imposition of safeguard duties on solar modules imports,” said an official familiar with the development.

Gridco, however, has clarified that it would not budge from its avowed stand on price cuts by L2 and L3 bidders. As per Gridco officials, it is constrained to commit long-term power purchase agreements (PPAs) where tariff exceeds Rs three per unit. Gridco has been tapping more competitive sources of sourcing solar power. The power trader last month signed a power sales agreement with the Solar Electrification Corporation of India (SECI). The pact is to buy 300 Mw from SECI’s upcoming auctions at an agreed price of Rs 2.57 per cent. The power is tipped to be fed to the state grid from 2019-20 end. According to the terms of the agreement with SECI, Gridco can draw this solar power without forking out transmission or wheeling charges.

Separately, Gridco is aiming to sign a PPA spanning 25 years with Aditya Birla Renewables by the end of this month. Gridco is understood to have opened the negotiations with the company officials. Aditya Birla Renewables has secured 75 Mw capacity which it proposes to split into five 15 Mw projects, each coming up at a separate location. Odisha Industrial Infrastructure Corporation Ltd (Idco) will facilitate land allotment for the solar installations.

Of late, Gridco has shown alacrity in buying solar power. Despite a pressing Renewable Purchase Obligation (RPO), Gridco’s solar offtake was slow to take off. Until its recent solar tenders, the state-controlled entity was shelling out Rs 4.5 per unit to buy solar power. Besides, an abundance of coal power generated within the state had deterred the bulk power purchaser to expand its renewable pool. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel