8 GW solar bids worth Rs 40,000 cr cancelled in FY’19, irks investors

Auctions for around 8,000 MW solar capacities worth Rs 40,000 crore were cancelled in 2018-19, leavig developers and investors high and dry, according to an industry source. 

Solar project developers continued to face uncertainties in 2018-19 as central and state government agencies as well as a private distribution company cancelled bids for 8,000 MW. 

“Bids were invited by government (s) as well as private distribution firms to procure around 8,000 MW solar power last fiscal from newly developed capacities. But auctions were cancelled later on,” the source said. 

It is as high as about 8,250 MW solar capacity added in 2018. 

The scrapping of bids has hit India’s ambitious target of achieving 1,00,000 MW of solar capacity by 2022. The country has achieved 26,025.97 MW solar capacity till February this year. 

Initially, India was targeting 20,000 MW solar power by 2022. In 2015, this target was raised to 1,00,000 MW within the same time line. Now experts are finding this target unachievable. 

India could add only about 8,250 MW of solar capacity in 2018, which was 15.5 per cent less than 9,775 MW added in 2017, the source said. 

In 2018-19, Gujarat and Uttar Pradesh state agencies cancelled 1,200 MW and 1,000 MW of bids, respectively. 

Central government’s Solar Energy Corporation of India (SECI) cancelled 2,400 MW out of 3,300 MW of Interstate Transmission System (ISTS) connected solar auction. Subsequently, SECI scrapped 3,000 MW of manufacturing linked bid. 

Moreover, private electricity distribution major Torrent Power scrapped its bid to purchase 300 MW of solar power to meet its renewable energy purchase obligation. 

The move came after Adani Green and Avaada submitted their bids to supply 100 MW and 50 MW, respectively. The last date for the bid to procure solar power for 25 years was extended from February 12 to March 15 before Torrent Power scrapped the auction. 

Torrent Power distributes electricity in Ahmedabad-Gandhinagar, Surat, Agra and Bhiwandi. With Torrent Power too scrapping the bid, the woes of the sector have escalated owing to issues like uncertainty over safeguard duty on imported solar components, restructuring of External Commercial Borrowing norms by RBI and introduction of GST. 

“Uncertain policies and serial cancellation of the solar bids will cloud the success of the biggest ever bid planned by SECI for 10,000 MW. Bid cancellation by Torrent Power has taken toll on our confidence in the so called sunrise sector,” said a top executive with a leading solar project developing company. 

According to experts, bids are being scrapped in India in view of the race for lower tariff at a time when unreasonable competition has jeopardised financial viability of several solar power projects. 

Policy flip-flops and concerns over capping of tariffs have also led to developers shying away from participating in the bids. Earlier, SECI had to extend or scrap bids since capping the tariff did not generate adequate response. 

In its report earlier this month, rating agency CRISIL estimated that solar power installations will reach only 70,000 MW by 2023, falling 30 per cent short of the target. 

The report added that developer sentiment had turned negative due to lack of clarity on several policy issues and arbitrary bid cancellations, contrary to a supportive policy stance. 

sources@economic times