The southern Indian state of Kerala has finally joined the bandwagon of Indian states launching massive solar power tenders.
The Kerala State Electricity Board has floated a tender for 200 MW of solar power capacity. Bidders will be able to submit bids for project capacities between 10 MW and 200 MW.
The benchmark tariff has been set at Rs 7.04/kWh (US¢11.0/kWh), which is significantly higher than the lowest-ever tariff of Rs 4.34/kWh (US¢6.5/kWh) realized in an auction few months back.
According to media reports, tariff bids for this tender are expected to be higher than the recent ones due to several reasons. The project developers will be required to identify and acquire land on their own. Bank guarantees and bid bond amounts to be submitted by the bidders are also higher than other recent tenders.
Nevertheless, healthy response to the tender can be expected, as Kerala enjoys substantial solar radiation resources. The state has not seen any major capacity addition since the launch of the National Solar Mission in 2010. By the end of February 2016, only 12 MW of capacity had been commissioned in the state, none of which was achieved in the current financial year of 2015-16.
The Indian government recently increased the solar power procurement obligation from 3% by 2022 to 8% by 2022. To achieve this target, Kerala needs to have an installed solar power capacity of 1,429 MW by 2022.
While this is the first major solar power tender announced in the state, at least one public sector company had previously announced plans to set up a utility-scale solar power plant in the state. THDC Limited, a government-owned company that operates large hydro power projects in north India, has stated plans to set up 50 MW capacity through Solar Energy Corporation of India.