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India Solar Mission: First phase bids "unrealistic"

India’s decision to select the developers of its first phase of CSP projects by price rather than technical capacity could cause the country’s nascent industry to trip at the very first hurdle.

Industry experts fear that overly aggressive pricing for India’s first-round of concentrated solar power (CSP) projects could set back the industry before it has even properly begun. Last month, state-owned power trader NTPC Viyut Vyapar Nigam (NVVN) contracted 470MW of CSP power generation from seven companies. The contracts comprise the first phase of India’s high profile Jawaharlal Nehru National Solar Mission.

The bulk of the contracted capacity falls to Indian power companies Rajasthan Sun Technique Energy (a subsidiary of Reliance Power), Lanco Infratech and KVK Energy. All were allocated 100MW. The remainder is to be divvied up between Megha Engineering, Godavari Power & Ispat, Corporate Ispat Alloys and Arum Renewable Energy.

Industry insiders, however, fear that the winning companies have neither the technological expertise nor a financial-viable business model to see the projects through to profitable completion. “It is doubtful that they can build the capacity for which they have allocations . . . which is very dangerous for the industry as a whole”, states Shiv Shukla, president and chief executive at developer Abengoa Solar India.

The primary problem relates to “unrealistic” prices, he maintains, suggesting that all seven companies will struggle to close finance for the allocated projects. India’s Central Electricity Regulatory Commission (CERC) has set the feed-in tariff for CSP plants at Rupees 15.31/kWh ($US0.32). Against this the first phase bidders are offering discounts of between Rs.3.07 (US$0.07) per unit, as in the case of Corporate Ispat, to as high as Rs.4.82 (US$0.1), in the case of Lanco Infratech.

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