KSEB Finally Closes 200 MW Solar Tender At Rs 2.97/unit, NTPC, Tata Power Winners

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The Kerala state Electricity Board (KSEB), after a nearly year long struggle, has finally reached closure on its quest for 200MW solar power for the state, though the final reported price, Rs 2.97.unit , may not exactly be what they had hoped for.

Keep in mind that the board had failed to convince NHPC to supply 200 MW to the state earlier this year, as NHPC raised its hands after all available power on its 200 MW tender at Rs 2.55 (plus 7 paise trading margin) was snapped up by other discoms before KSEB could confirm.

NTPC, which placed its bid at Rs 2.97 per unit for 90 MW, gets it full bid, while Tata Power, which had bid at a higher amount for the full 200 MW, had to settle for the remaining 110 MW  after matching the lower bid value of NTPC.

KSEB had earlier floated a tender for the amount in March 2019, where a poor response (Sole bidder CIAL Infrastucture for 10 MW) meant that it eventually had to cancel the whole tender.

In an order dated August 25, the KSERC (Kerala State Electricity Regulatory Commission) allowed the agency to make modifications that it needed to attract better quality interest and bids. These changes included relaxations on pricing, sourcing of the power from solar plants anywhere in India (with a preference for ground mounted plants in Kerala), and interestingly, the need for a minimum of two bidders, among others.

As it turns out, the changes were just enough to entice two players, NTPC and Tata Power to make a bid.

In a related submission to the KSERC, KSED had petitioned saying By the year 2021-22, as per the RPO targets fixed by the Commission, KSEB Ltd has to meet 6.75% of a total energy consumption from solar power. This target is likely to be increased in the subsequent years. In order to meet this solar RPO, KSEB Ltd has to generate / procure around 734 MW solar power. However, the existing solar capacity of the State is 188.19 MW only.

KSEB Ltd further submitted that though the solar RPO specified by the Commission is only 6.75%, the target fixed by the Central Government is 10.5% of the total consumption and if the Commission insist to meet this target KSEB Ltd has to generate / purchase 1141 MW solar power.

The current discovered price will rankle a little for KSEB officials, as they had believed themselves to be very close to sourcing 200 MW solar power from NHPC at Rs 2.55 /unit earlier. A delay caused by KSEB’s desire to make some changes in the Power Sales Agreement (PSA) with NHPC led to the central PSU committing the power to other state discoms, leaving KSEB in the lurch. While the KSERC did not approve of the manner in which NHPC ‘handled’ KSEB, it had no option but to allow KSEB to seek to buy the power elsewhere. But the price of Rs 2.55/unit is likely to rankle, if the discom fails to get it in subsequent auctions, as the current one.