SECI Confirms Adani, Azure, as Winners of ‘Largest’ Manufacturing Linked Bids

12 GW solar generation capacity, and 3 GW  of manufacturing/solar kit capacity. That’s what SECI has given approval to add, starting as early as 2022 by putting in motion the January 2020 tender for the largest single investment in the country’s solar sector. SECI  has formally given the go ahead to Adani Green Energy  for a solar panel manufacturing capacity of 2 GW (2000 MW), and linked to that, a generation plant of a total of 8000 MW capacity. That has been estimated to ring in investments worth almost Rs 50,000 crores or over $8 billion dollars.  With its existing facilities in Gujarat, Adani Green is expected to set up further manufacturing there only, while the generation PV plants  will be spread out over more states, notably Rajasthan. The tender had finally closed in November after multiple extensions, when it finally drew a good response.

Azure power,  which had been awarded a 500 MW production contract and 2 GW generation capacity, also gets the benefit of the greenshoe option which it has exercised, to finally end with 1000MW manufacturing, and 4000 MW of generation capacity. That will add another $4 billion of possible investments. Developer Azure had earlier indicated that Waaree Energies, a leading domestic player, would partner with it on the manufacturing side of the deal. Though it is unclear if Waaree would do the full 1 GW capacity now.

The projects envisage start of commissioning in phases (of 500 MW each) by 2022, although that might see a slight extension due to the final award and impact from the lockdown.

These manufacturing linked projects had been floated in November, with Adani Green and Azure emerging as winners in January. With effectively a guaranteed off take for the first 3-4 years for the manufacturing that is set up, at a higher tariff ceiling price of Rs 2.93 kWh, the idea was to provide manufacturing investments with enough comfort for a ready demand and pricing in the initial phase.

Interestingly, the award also reflects what seems to be the prevailing view at Adani Green, that considers a manufacturing subsidy if any to be far more preferable in the form of higher prices , than any government support. This is also the point the firm’s Ceo, Jayant Parimal had made earlier last month, during an interaction of energy leaders with Mr. R.K. Singh, Power and MNRE  minister.

A bigger hope is also to see better quality manufacturing entrench itself in the country, as a large part of the current domestic manufacturing capacity needs an upgrade to catch up with global standards.

The final move here will come as a relief to a government, and the MNRE, that has been trying hard to kickstart the manufacturing push. The past few months have seen a series of cancellations, when it comes to projects the government counts in its  ‘pipeline’ with at least 8 GW of said pipeline at risk.

With a key decision on basic customs duty for solar equipment also due to be taken up soon, we continue to believe that real duty protection will only start post 2022 possibly, as it is almost too late to have any positive impact from duty protection for Indian manufacturing between now and 2022 end, a key deadline for India’s solar targets.

Some Industry insiders have pointed to the lack of fresh faces in the bid winners, with Adani Green simply entrenching its position even more with this bid in the domestic market.The firm had been one of the few beneficiaries of the Safeguard Duty that was tried out in July 2018 by most accounts, as only it had the cell manufacturing capacity that could benefit from the duty. Module makers barely benefited as Chinese firms dropped prices further to make the impact of the duty much lower than expected on domestic prices.