Railways Runs Into A Red Signal For 1 GW Solar Tender

The Railway Energy Management Company Limited (REMCL)’s tender for a 1GW of solar plants on railway land available close to railway tracks has run into a wall of disinterest from solar developers. The tender, with  deadline of  September 2, was a detailed one that included the design, build, finance, operation, long– term maintenance and transfer of assets for solar PV project and the supply of electricity to Railways under long-term fixed-rate PPA.

The poor response from developers has been ascribed to lack of demand for existing projects that have been bid out in the past quarter, besides SECI’s 14 GW pipeline under development already. It seems SECI, and many developers would rather have the railways commit to picking up power from these, than go for fresh capacity at this stage.

Thus, lack of power demand, coupled with abundance of thermal and other power sources, has constrained demand yet again for renewable energy efforts for the railways.

The issue is clearly not something that will go away in a hurry, as overall demand will follow its own cycle of recovery after the Corona shocks, while the overall power system remains tied into legacy long term PPA’s which offer little option to curtail or exit for state discoms. The same issue has also throttled growth of rooftop solar until now, with most discoms making piecemeal efforts to allow more solar generation.

Faster electrification of transportation, of which railways itself is one part, is a way out. It’s an area where the Railways own plans have progressed fairly well, and it might yet have to take a harder look for an energy self sufficiency model driven by renewable energy, if its ambitious plans for renewable energy capacity are to be met. 20 GW was the last figure we heard from the railway minister Piyush Goyal on their long term solar power generation plans.

The fact that this is now impacting generation from large utility scale projects is a serious cause for worry for the government too. Unlike many other entities, the railways remains a relatively credit worthy option for developers with a decent track record on payments in general. Developers have increasingly looked to take up  utility projects that have a payment mechanism  tied to central government entities like SECI and NTPC, to avoid the sort of payment delays from state discoms that have plagued the system over the years now.  By keeping the railways out, the system does miss out on a credit worthy client.

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Prasanna Singh

Prasanna has been a media professional for over 20 years. He is the Group Editor of Saur Energy International