Karnataka Solar Policy

The Karnataka State Government has come out with the state solar policy. Sharing an article written by me in Energetica India, a power magazine:

http://www.energetica-india.net/magazine/view/september-october-2011/#/34/

The Karnataka Renewable Energy Development Ltd. (“Authority”/ “KREDL”) incorporated under the Companies Act, 1956 is a nodal agency of the Government of Karnataka to facilitate the development of renewable energy in the State of Karnataka. KREDL processes all applications received for setting up of renewable energy generations plants and based on their recommendation, Government of Karnataka (“GoK”) approves and grants rights to such independent power producers set up their generation plants in the State.

Subsequently, KREDL also monitors progress of various renewable energy projects in the State. In furtherance of the said objective and in line with the Renewable energy Purchase Obligations (“RPO”) set out by Karnataka Electricity Regulatory Commission (“KERC”), GoK intends to undertake development of 80  MW of solar power energy in the State of Karnataka which will be combination of solar thermal (“Solar Thermal Project(s)”) and solar PV (“Solar PV Project(s)”) (hereinafter referred to individually as the “Project” and collectively referred as the “Projects”). GoK has, through KREDL, decided to carry out the said Project through private sector participation and has decided to carry out the bidding process for selection of the Bidders to whom the Project(s) may be awarded

 Bidders are allowed to bid for one or more Project(s) based on the Eligibility Criteria stipulated in the Request for Proposal (RFP).

 The aggregate capacity for both Solar Thermal Projects and Solar PV Projects is 80 MW, wherein 30 MW is allocated for Solar Thermal Projects and 50 MW is allocated for Solar PV Projects. 

In case of Solar Thermal Projects, a bidder could propose project(s) having minimum capacity of 5 MW and the maximum capacity of 10 MW.

In case of Solar PV Projects, a bidder could propose project(s) having minimum capacity of 3 MW and the maximum capacity of 10 MW.

 The maximum capacity to be allotted to any bidder will be 10 MW.

 Connectivity with the Grid:

The solar developer is responsible for power evacuation from the power plant to the nearest sub-station/delivery point. The interconnection to the nearest substation/delivery point is to be at the voltage level of 11KV for electricity generation capacity of less than 5 MW. The interconnection to the nearest substation will be at the voltage level of 33/66/110 KV for electricity generation capacity of greater than 5 MW.

The selected bidder is expected to get power evacuation approval within 180 days of signing of the PPA.

 Water Availability:

In case of Solar Thermal project, the bidder is responsible to make arrangements for the water required for the project. The bidder is expected to submit calculation and evidence in form of approval from the local authority for the quantity of water required for the project.

 Process:

KREDL will receive bids in accordance with the terms set forth in the RFP. A single bidder is allowed to submit bids for one or more projects. However each bid will be treated as a new bid.

 The evaluation of the bid submissions will be carried out in the following three stages:

a. The first stage involves opening and evaluation of the Key Submissions and a test of responsiveness based on the provisions of the RFP.

b. In the second stage, the information of the bidders relating to their eligible experience comprising Technical Capacity and Financial Capacity (“Eligibility Criteria”) would be evaluated.

c. The Financial Bid would be opened and evaluated to identify the selected bidder.

 Financial Bids are invited for the project on the basis of discount in paisa/kWh on KERC Approved Tariff (the “Discount in Tariff”).

The bidder offering the maximum quantum of Discount in Tariff will be selected first and so on till the total aggregate capacity of 80 MW is reached (the “Selected Bidders”).

 

 Schedule of Bidding Process:

1. Last date for receiving queries August 22, 2011

2. Pre-Bid Conference August 23, 2011

4. Bid Due Date October 20, 2011

5. Opening of Key Submission and Qualification Submissions. Date not announced yet.

6. Financial Bid Opening. Date not announced yet.

 The bidders will be required to deposit, along with its bid, a bid security (“Bid Security”) for each project, equivalent to an amount of Rs.20,00,000/- (Rupees Twenty Lakhs) per MW of the proposed capacity The Bid Security will be refundable if the bidder is not selected.

 General terms of Bidding:

In case the selected bidder is a consortium, the members of the consortium will collectively hold at least 51% of subscribed and paid up equity share capital of the SPV at all times until the end of the 3rd year of commercial operations date.

Lead member will have 26% shareholding of the SPV until the end of the 3rd year of commercial operations date.

Thereafter, all the members of the consortium will, until expiry of the PPA period, hold not less than 26% of the subscribed and paid up equity share capital of the SPV.

In case the selected bidder is a single entity, it will hold at least 51% of subscribed and paid up equity share capital of the SPV, until the end of the 3rd year of commercial operations date and at least 26 % subscribed and paid up equity share capital of the SPV at all times for the remaining term of the PPA.

 Bid Bond:

 

Discount offered on KERC Approved Tariff Amount of Bid Bond applicable for every paise of discount on KERC Approved Tariff (per MW)
Upto 10% or 10% Rs.10,000/-
More than 10% & Upto 15% Rs.20,000/-
More than 15% & Upto 20% Rs.30,000/-
More than 20% & Upto 25% Rs.40,000/-
More than 25%  Rs.50,000/-

 

 Technical Capacity:

The bidder is expected to deploy commercially established technology wherein there is at least one project successfully operational of the proposed technology, for at least one year, anywhere in the world. The bidder is required to undertake to furnish evidence of meeting the Technical Capacity in line with the provision of RFP.

 Financial Capacity:

The bidder will require a minimum net worth equivalent of Rs.3 crore per MW of the proposed capacity as on March 31, 2011 (the “Financial Capacity”).

In case of a consortium, the net worth of all the members of the consortium would be aggregated.

  Financial Closure:

The selected bidder is expected to achieve financial closure within 180 days of signing of the PPA.

 Sharing of Clean Development Mechanism (CDM) Benefits:

The proceeds of carbon credit from approved CDM project is to be shared between selected bidder and the concerned ESCOM in the following manner:

a. 100% of the CDM proceeds is to be retained by the selected bidder in the year after the date of commercial operation of the power plant.

b. In the second year, the share of the concerned ESCOM will be 10%; to progressively increase by 10% every year till it reaches 50%, where after the proceeds will be shared in equal proportion, by the selected bidder and concerned ESCOM.

 Commission of Project:

In case of solar thermal project, the selected bidder needs to initiate the commercial operation within 30 months of PPA signing.

In case of failure to achieve the target date, the PPA holder looses:

 

Delay in Months KERC will encash % of  Performance Bank Guarantee of the propriate uncompleted MWs
Upto 1 month 20% of total Performance Security
Between 1-3 months  40% of total Performance Security
Between 3-5 months  40% of Performance Security
Beyond 5 months Project Developer to pay liquidated damages of Rs.1,00,000 /MW per day of delay

  

Delay beyond 36 months from the PPA signing date could lead to termination of PPA agreement.

 In case of solar PV project the selected bidder needs to initiate the commercial operation within 18 months of PPA signing.

In case of failure to achieve the target date, the PPA holder looses:

Delay in Months KERC will encash % of  Performance Bank Guarantee of the propriate uncompleted MWs
Upto 1 month 20% of total Performance Security
Between 1-2 months  40% of total Performance Security
Between 2-3 months  40% of Performance Security
Beyond 3 months Project Developer to pay liquidated damages of Rs.1,00,000 /MW per day of delay

 

Delay beyond 24 months from the PPA signing date could lead to termination of PPA agreement.

 Performance Security:

The selected bidder will need to furnish performance guarantee by way of an irrevocable Bank Guarantee for an amount Rs. 30 Lakh/MW (“Performance Guarantee”) issued by a Scheduled Bank in India.

In addition to the performance guarantee the bidder will convert the bid security and bid bond into Performance Security. The Performance Security (after conversion of Bid Security @ 20Lakh/MW, Bid Bond & Performance Guarantee@ Rs.30Lakh/MW) will be valid for a period of 48 months in case of Solar Thermal and 36 months in case of Solar PV Project from the date of signing of the Power Purchase Agreement.

At the time of signing of Power Purchase Agreement the bidder will need to submit 3 bank guarantees towards the Performance Security and the same will be submitted in the ratio of 20%, 40% & 40%. (Example – If total Performance Security value including, Bid Security, Performance Guarantee & Bid

Bond (after conversion) is Rs.4.00 crores, then three Bank Guarantees of value Rs.0.80 crores, Rs.1.60 crores & Rs.1.60 crores are to be submitted).

 Technical Qualification

The technical qualifications required are:

 Solar PV

 1. PV Module Qualification

The PV modules used in the grid connected solar power projects must qualify to the latest edition of any of the following:

  • IEC PV module qualification test or equivalent BIS standards.
  • Crystalline Silicon Solar Cell Modules IEC 61215
  • Thin Film Modules IEC 61646
  • Concentrator PV modules IEC 62104

 In addition, PV modules must qualify to IEC 61730 for safety qualification testing. For the PV modules to be used in a highly corrosive atmosphere throughout their lifetime, they must qualify to IEC 61701.

  2. Authorized Test Centres

The PV modules must be tested and approved by one of the IEC authorized test centres. In addition a PV module qualification test certificate as per IEC standard, issued by ETDC, Bangalore or Solar Energy Centre, MNRE, New Delhi will also be valid.

 3. Warranty

 The mechanical structures, electrical works and overall workmanship of the grid solar power plants must be warranted for a minimum of 5 years.

 PV modules used in grid connected solar power plants must be warranted for output wattage, which should not be less than 90% at the end of 10 years and 80% at the end of 25 years.

 4. Identification and Traceability

Each PV module used in any Solar PV Project must use a RF identification tag (RFID).

  Solar Thermal

  1. Only new plant & machinery to be used.

 2.   Any of the Concentrated Solar Power (CSP) technology, such as, Parabolic Trough Collectors, Solar Dish Stirling (or any other prime mover), Linear Fresnel Reflector, Central Tower with heliostats, or their any other combination could be used.

 3. All grid connected solar thermal power plants will install equipment for regular monitoring of solar irradiance (including DNI), ambient air temperature, wind speed and other weather parameters and simultaneously for monitoring of the amount of electric power generated from the plant. They will submit this data to KREDL and / or through a report on regular basis for the entire duration of Power Purchase Agreement.

 4. Developer must fulfil either of following requirements 

  • Developer is himself a technology provider who has either experience in design and engineering of at least 1 MW capacity solar thermal power plant having been in operation for a period of at least one year on the specified cut-off date, or obtained at least one financial closure of a solar thermal power plant of at least 50% of the proposed capacity based on the proposed technology OR has an Technology tie-up.

 

  • Developer is an EPC contractor/power generating company having experience in engineering, erection and commissioning of at least 100 MW capacity conventional thermal power plant and a tie-up with a technology provider fulfilling technology requirements OR has an EPC tie-up.

 

  • Developer is an EPC contractor having experience in engineering, erection and commissioning of at least 1 MW capacity solar thermal power plant and a tie-up with a technology provider fulfilling technology requirements OR has an EPC tie-up.

 

 

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