Hero, ReNew Big Winners in Karnataka Solar Power Tender

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hero-renew-big-winners-in-karnataka-solar-power-tenderNEW DELHI: Hero Future Energies and ReNew Power emerged big winners in a mega tender for 1,200 MW of solar power capacity floated by the Karnataka government, with both bagging 180 MW each of projects.
“This win will establish Hero Future Energies as one of the major players in the solar segment with a pipeline of around 400MW of projects under various stages of execution,” said Sunil Jain, its CEO and executive director.

The Hero Group firm made the lowest winning price bid in the entire auction at Rs 4.69 per kilowatt-hour (kWh) for the talukas of Gangavati, Chikkanayakanhalli, Koratagere and Madhugiri. The highest winning bid in the open bidding was Rs 5.81 per kWh for Nagamangala taluka. All the winning bids were substantially lower than the benchmark tariff of Rs 6.51 per kWh the Karnataka government had set.

The bids were opened last Friday.

The lowest winning tariff is a shade below that which won the last solar auction held in Uttar Pradesh (Rs 4.78 per kwH) in February but higher than the prices touched in Maharashtra (Rs 4.43 per kwH) and Rajasthan (Rs 4.34 per kwH) auctions in January. 

One reason for this is the varying conditions in different states. For example, the sun’s radiation is much stronger in Rajasthan and Maharashtra than in Karnataka. Besides, Rajasthan had offered assured land in a solar park while in Karnataka developers will have to identify and acquire land on their own.

Even so, the Karnataka prices are comparable with that of power from new coal.

Karnataka is the first state to distribute solar contracts across its length and breadth. The location of the proposed solar plants has been dispersed across 60 of the 177 talukas in the state, with each taluka getting between 3 MW and 20 MW. As a result, the winning tariff at different locations varies.

Hero Future Energies has won bids of 20 MW each across nine talukas, quoting tariffs between Rs 4.69 and Rs 4.86 per kWh. ReNew Power has also 20MW bids in nine other talukas at prices  ..

“The taluka based bidding process is unique, with the rationale seemingly being that the state wants to disperse solar capacity across different regions rather than creating large concentrated capacity,” said Shaurya Bajaj, analyst at solar consultancy Bridge to India in a blog post before the results were declared.

“This is desirable from the point of view of reducing stress on transmission infrastructure but will create many complications in bidding and lead to inconsistent competition as some talukas may be more lucrative than others (differences in radiation, transmission infrastructure and land prices)… However, with restrictions on capacity developed under each taluka, it would be difficult for developers to scale up projects,” he wrote.
Other winners in Karnataka included the Aditya Birla Group (40 MW), Essel Green Energy (65 MW), Marikal Solar Park (60 MW) and SunEdison (20 MW). A dozen talukas, accounting for a total of 240 MW, received no bids at all and will have to be retendered.

The auction also reserved 100 MW for Karnataka-based solar module manufacturers. “This was also highly unusual. No other state or central policy has ever imposed such a condition previously,” wrote Bajaj. The tariffs in this reserved category were higher with the lowest winning bid of Rs 6.47 per kWh coming from Emvee Toughened Glass that won 45 MW

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