Greentech Lead India: Karnataka says pre-bid meeting for allocating 130MW solar capacity will take place on 12 March and bid submission due date is 28 March.
This is Karnataka’s second round of allocations under its state solar policy. Karnataka announced its solar power policy in July 2011 with a target of 350MW by 2016.
The Karnataka government had called for bids worth 80MW on 9 August 2011, consisting of 50MW of solar PV and 30MW of CSP. However the allocations were made for only 20MW of CSP, due to the lack of valid bids and 60MW of PV.
In the last round that took place one year ago, 80 MW was allocated.
Bridge To India noted that 10MW ceiling on every CSP project was too low to attract developer’s interest. The lowest successful bid for €0.12/kWh was submitted for a 10MW PV project by Helena Power Private, while the highest bid of €0.13/kWh was for a 7MW PV project by Welspun Solar AP. The state has also removed all wheeling charges for the transmission of solar power within the state to encourage investment in the sector. The Karnataka Solar Power Policy has no DCR.
In the first round, 50 MW was reserved for PV and 30 MW for CSP. However, since proposals for 20 MW of CSP came in, the remaining 10 MW had been transferred to PV. This time round, no demarcation has been made for PV and CSP. Given that the maximum size of a single project is 10 MW as per the RfP document, it is unlikely that any developer will bid for CSP. The minimum size for a single project is 3 MW.
The primary aim of these allocations is to meet the Renewable Purchase Obligation (RPO) of the state’s power distribution companies. No attempt has been made to deviate from this limited objective and put forward more ambitious targets like other states such as Gujarat, Andhra Pradesh and Tamil Nadu have done.
The bidding process in Karnataka is similar to its previous allocations as well as to phase one of the National Solar Mission (NSM): a reverse auction, based on a (rather surprising) benchmark tariff of INR 14.50/kWh for PV and 11.35/kWh for CSP.
Unlike other new policies in Tamil Nadu, Andhra Pradesh and Rajasthan, the state has not opted for the L1 process, wherein developers are asked to meet the lowest bid.
Stability in Karnataka’s might be considered a good thing on the face of it. However, solar is a new market and the regulatory environment has been evolving constantly over the last two years, with plenty of opportunity to learn from different policies.
For example, Gujarat came out with the concept of solar parks. Solar parks help developers streamline the development process. Andhra Pradesh became the first state to waive open access, wheeling and other grid-related charges, thereby opening up the markets for direct third party power sales.
Tamil Nadu pioneered Solar Purchase Obligations (SPOs), effectively shifting the cost of solar from debt-ridden power distribution companies to large power consumers.
Both Kerala and Tamil Nadu are planning to offer net-metering, which can open up the immense potential of the residential market. India is currently a great laboratory for solar policies, with a key focus on ensuring bankability. To stand still in such a dynamic market means losing out on opportunities to deliver more solar power more rapidly to more consumers at lower rates.