The Lack luster response to TANGEDCO's Solar Tender is cemented by the News that Large bidders keen on setting up utility scale solar power generation projects have backed out of the bids.
According to the leading daily Hindu (link), Large players such as IL&FS, Crescent Power, a multinational player
in solar project and large developers have expressed their inability to
invest in the solar project at the tariff quoted by Tangedco.
A large real estate developer who had participated in the bid said the
company found that there would be ‘negative cash flow’ at that level not
counting the benefit of accelerated depreciation. Investment of over Rs
8.5 crore a MW cannot happen depending purely on accelerated
depreciation.
A large player with solar power generation projects in multiple
locations said that at the tariff quoted by Tangedco, the returns would
not be worth the effort – it would be on par with bank interest rates
and will not interest investors.
IL&FS pointed out in a communication that at the rates proposed by
Tangedco the returns would be below 10 per cent and investors will have
to contend with negative cash flows for the first five years.
Tangedco officials have expressed confidence in investors committing to
the project. There is still time to go for the bids to be finalised.
Over 90 bidders had submitted bids totalling close to 500 MW of solar
power generation capacity in January in response to a tender floated by
Tangedco. The utility had called for bids for over 1,000 MW of solar
power generation capacity. The proposal was for the winning bidders to
tie up with Tangedco to supply power for 20 years.
Last month when the bids were opened, the lowest bid was for Rs 5.97 (link) and the highest ranged around Rs 18 a unit.
