News from the much celebrated 2 GW auction of NTPC in 2018, where top developers had bid for prices as low as Rs 2.59 is not good. 70 percent of the capacity won by developers, namely, Acme Solar, Shapoorji Pallonji, and Azure Power, have opted out of the deal, citing regulatory delays.
The option of cancellation with the bidders was there in the PPA, which they have duly enforced now. Interestingly, SB Energy, which had won 600 MW at a Rs 2.60 bid, is the only developer left. Readers might recall that SB Energy had actually made a bid for the full 2 GW complement, but got ‘only’ 600 MW as it missed the lowest price by a whisker in the oversubscribed tender.
The tender had stood out for the fact that it was one of the first big awards after the safeguard duty was announced, and to that extent, these costs were easily as good as the record low price of Rs 2.44 that had been witnessed earlier.
As it turns out, almost each of the developers mentioned here have their own liquidity issues to deal with currently. From general distress (ACME Solar) to a new team transitioning at Azure. The Shapoorji Pallonji group and its travails linked to its now listed EPC arm Sterling and Wilson have been well documented to be detailed again .
While no such proviso exists, even SB Energy may be loathe to pick up the slack anymore at the price that had been quoted by it, even had that option existed.
The net outcome of these cancellations are a stark reminder of the state of the solar ‘pipeline’, that Power and MNRE minister R.K. Singh spoke about in Parliament, when he defended the government’s record on solar targets.
In a hard hitting response to allegations of slowdown on November 28, 2019, Shri R.K. Singh had stated that ” projects of 17998 MW capacity are at various stages of installations and tenders for 36278 MW capacity projects have been issued.” With new tenders of around 15000 MW planned in remaining period of 2019-20 and 2020-21, he claimed that the country was on course for meeting the target.
These numbers, especially the 36 GW of tendered capacity is increasingly looking under threat, as just the past three months has brought to light at least 3 GW worth of cancelled projects. Add to that, the continuing paralysis in rooftop solar growth, which had a share of 40GW in the 100 GW target for 2022, and we have the beginnings of a proper data based answer to the Minister’s optimism.
With discoms increasingly resisting renewable energy more aggressively to pressure the sector into lower prices, the situation has only worsened since August 2018. Strangely enough, at no time in the past few years have hopes been higher for a solution in the union budget, as everyone has finally realised that without solving the discom jam, sustained progress is simply impossible for the sector.