Monday, September 5, 2011

Bid Analytics for JNNSM Batch-1 Solar PV projects

1000 MW Phase-1 under JNNSM by 2012

Under the Jawaharlal Nehru National Solar Mission (JNNSM), the total aggregated capacity of grid connected Solar Projects in Phase-1 shall be 1000 MW. The deployment of Solar PV and Solar Thermal projects shall be in the ratio of 50:50. The allocation of capacities in Phase-1 is done in two batches and over two financial years  i.e., 2010-2011 and 2011-2012. The total capacity of Solar PV projects to be selected in First Batch i.e., in FY 2010-11 was limited to 150 MW. The Projects for remaining capacity of 350 MW for Solar PV Projects will be selected in current Second Batch i.e., in FY 2011-12 (See detailed guidelines from earlier post 'Solar JNNSM Batch-2 pickup - RfS deadline 23 Sep').  Grid connected Solar Thermal power projects of an aggregate capacity of 500 MW have already been selected in FY 2010-11.

Bid Analytics of Batch-1 JNNSM Solar PV Projects

The mission has designated NTPC’s Vidyut Vyapar Nigam Limited (NVVN) as the nodal agency for procurement of solar power. On 18th August 2010, NVVN invited Request for Selection (RfS) from interested developers to develop 150 MW solar PV projects with a capacity of 5 MW each, and 500 MW solar thermal projects with a minimum capacity of 5 MW and maximum of 100 MW each. The last date for receiving the RFS was September 24, 2010. NVVN received 418 RfS from both PV and Solar Thermal project developers. Out of the total of 418 requests, 343 were applications for solar PV and 55 for Solar Thermal.

The interest in investor community was high with Solar PV receiving 343 applications (x 5MW = Total 1715 MW) against requirements for 30 projects (total 150 MW) i.e. 11.43 times higher application. The process then went into 'reverse bidding' to select only 30 bidders, with winner being the company that can offer highest discount to base set tariff rate of Rs. 17.91 per kWh. 

The 'winner' 30 bids for solar PV under Batch-1 varied from Rs. 10.95/kWh to Rs. 12.76/kWh, at an average bid price of Rs. 12.15/kWh.

Below is the list for 'selected' 30 Solar PV projects (each 5MW) under Batch-1 JNNSM in 2010-11:

Some key observations from above bid results:
  1. 21 out of 30 projects (i.e. 70%) located in Rajasthan
  2. Majority of bids between 300 to 500 paisa (i.e tariff rates between Rs. 12.91 to 14.91 per kWh)
  3. Best win bid of 696 paisa (i.e. tariff rate of Rs. 10.95 per kWh)
  4. Lowest win bid of 515 paisa (i.e. tariff rate of Rs. 12.76 per kWh)
  5. Major institutional players like Moser Baer, Solar Semiconductor, Titan, Lanco, AstonField Solar, SunBorne, IL&FS and others couldn't win any direct project through bidding. 

MNRE is following the similar 'reverse bidding' process this time too with revised base rates as approved by CERC. For the allocation in Batch-2 of Phase-1, the CERC base price for solar PV projects is Rs. 15.39/kWh (against that of Rs. 17.91/kWh)

Way ahead for Solar in India

Interesting question to be looked in Batch-2 JNNSM bid will be:
  1. With more experience and supporting ecosystem now, has project cost gone below than Rs. 12.5 cr/MW?
  2. With 11 times over subscription last time, would Batch-2 see similar and higher interest in the investors?
  3. Would tariff bid rate band go further below than Rs. 10.95 to 12.76 per kWh?
  4. Are there better financial linkages with more favorable financing terms now available to increase investor's confidence to participate in Batch-2?
pManifold has evolved a very detailed Excel model for Solar investment analysis, specially for grid connected plants. The Excel model is available for purchase. A brief glimpse into our Solar Investment model parameterization is shown.

As part of the Solar Practice, pManifold focuses on helping clients keep pace with the fast evolving industry and the opportunities there in through services for - Bid Advisory, Strategic Consulting and Investor Education.

Post by: Rahul Bagdia @ pManifold

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