SECI’s 1000 MW PSA Signing with TANGEDCO, Vital Step Forward For Mfg. Linked Tender Winners

Highlights :

  • PSA’s falling into place for the manufacturing linked 12 GW tender are good news for the whole sector.
  • Not only does it allow developers to start work, but also clears a large part of the backlog of stuck projects.
SECI’s 1000 MW PSA Signing with TANGEDCO, Vital Step Forward For Mfg. Linked Tender Winners The Wind is Blowing, Again

It says something for the dearth of good news we have had in the solar sector, that firms and even government bodies have taken to highlighting every step of the process from planning to tenders to winners to even the signing of PSA’s (power sales agreement) and PPA’s (Power Purchase Agreement) now. The backlog of projects awaiting PSA’s to start work has been building up, with the last estimate placing it at well over 21 GW.

However, for at least one such tender, the 12GW manufacturing linked tender that was awarded to Adani Green and Azure Power last year, such ‘celebrations’ seem justified. SECI’s award to these two firms was made last year, and work has not progressed since then, thanks to SECI’s struggle to find buyers for the power from the projects, priced at Rs 2.49/unit. Note that before signing its own PPA’s with developers now, SECI seeks to have PSA’s in place with actual end buyers in the form of state discoms or other bodies.

It finally achieved a breakthrough in July this year, when it announced the first signing with GRIDCO of Odisha for 500 MW. Following that now is a second sign up, a PSA with the Tamil Nadu discom, TANGEDCO for 500 MW.

Keep in mind that even this is not nearly enough, as ideally, SECI and the developers will want at least 3000 MW plus of PSA’s in place to start construction work and financial closures. But good news is indicated on that front too, with the news of the proposal for Andhra Pradesh to take up close to 3000 MW possibly by 2024, and a further 9000 MW by 2026. A final PSA there will more than cover the generation from the project/s, and finally allow the two winners to start planning for execution. But movement here will do much to reduce the backlog as well as prod other state discoms to move faster, considering the improvement in power demand and the mini-crisis we have seen this year due to shortages.

It is important here that while the delay is regrettable, both the winning firms seem to be confident of pulling off the project without a major impact on their costs possibly. While Adani Green will do the manufacturing part on its own it seems, Azure had indicated a tie-up with IPO bound Waaree Energies for its share of 1 GW manufacturing capacity.

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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