Finally NVVN has come out with the guidelines of 2nd batch of ~350MW of solar projects following the successful financial closure of batch 1 of nearly 650MW (official version).
[I guess I was more slower than NVVN; took me more than a week to put this online :)]
Some of the main changes, compared to clauses in 1st batch of Phase I include:
1. Increase in single bidding of 20MW but a company can bid for3 projects with maximum limit of 50MW in solar PV. Whereas in solar thermal, the minimum is 5MW and maximum is 100MW.
I believe this will be of interest to bigger foreign & Indian companies especially the ones that have their own modules manufacturing and EPC services. A bigger project not only takes care of sales of their modules but also attracts foreign funding. With modules & EPC within the same company; the margins can be quite attractive for renewable energy / cleantech focused funds and maybe also for other funds. Smaller players may start feeling the heat.
2. The financial closure time limit has been increased.
I don’t think this carries much significance. The developers from first round of Phase I went through a learning curve which was expected to take more time than planned for. But hopefully the experience from first round will assist developers and bankers to make a sound & quicker decision this time.
3. Cells and modules have to be manufactured in India. The exception being thin film and concentrating photovoltaic. In solar thermal, the domestic content needs to minimum 30% excluding land.
Contrasting thoughts on this. One being that this could be good news for Indian module manufacturers. They have been waiting for this news and looks like their prayers have been answered. But then do we have enough cell manufacturing capacity in India? Also most of the module manufacturers have started with a 5-20MW solar module manufacturing capacity and they still have not reached a stability stage where they can compete with the international prices. Bankers may also not be comfortable with smaller module manufacturers who may not be able to provide guarantees for 25 years. We may very well see smaller module manufacturers missing the fun here.
Also if NVVN divides solar PV and solar thermal in equal ratios we will have just 150-200MW of solar PV for reverse bidding. With 50MW per player; we could also look at just 4-5 bigger players taking the projects and these players will mostly have their own module manufacturing.
On the other hand, companies will also look at thin film imports to decrease costs and compete in the reverse bidding. Here again, the Indian module manufacturers will be on the losing side.
I personally do not see this clause helping the Indian module manufacturers to a great extent; except a few of them.
4. Controlling shareholding of the project is to be maintained at 50% for 1 year after commissioning for solar PV projects. Whereas its 26% for solar thermal projects.
The intention of this clause is to attract serious players only (serious= players with deep pockets and not serious start-ups with less deeper pockets). I do agree with the overall intention but somehow am still not convinced on this.
Also certain investors come with certain risks criteria and they invest only after approval of PPA. This is a normal international way of power financing. The Indian government needs to recognize this. I think asking the initial shareholder to maintain minimum 26% stake after PPA signing seems a more logical approach to attract investments and look at faster implementation of power projects.
Yes the government does not want to encourage trading of PPAs but then that needs strict implementation of deadlines rather than discouraging clauses.
The date for initialing the process is 23rd September 2011. So we will be looking at PPA signing somewhere around March 2012, financial closure in October 2012 and commissioning by March-April 2013.
I just went through the market EPC prices with 2 companies and based on our findings, I will; on a personal level; expect tariff to be in the range of Rs.10.5-Rs.11.25 in solar PV. Hope I am wrong and we see better prices. Lets wait & watch.
I would also like to thank everyone for the support and encouragement to reach this 100th post of the blog.