The state of Madhya Pradesh under the RESCO (Renewable Energy Service Company) model recently floated a tender for the implementation of grid-connected rooftop solar PV projects in the state worth around 2.2 GW by 2022. The first of which was a 28 MW solar PV capacity project, the tender for which was released in June.
The tender by RESCO organised a detailed data room for bidders to address information asymmetry. As a part of India’s leading role in the solar sector, the International Solar Alliance (ISA) held a live webcast of the tender’s pre-bid for all its member countries in June.
The total capacity of the entire rooftop plan has been split into 22 project groups, with capacities in each group ranging from 50 kWp to 5.7 MWp, and bidders will have the freedom to bid on either one or multiple projects. The bidding criteria are the first year electricity tariff (INR/unit), which will be increased by 3% every year until the end of the 25-year term of the project.
The winning bidders will have to undertake on an EPC agreement of designing, engineering, supply, installation, testing and commissioning along with comprehensive operation and maintenance for 25 operational years of these projects after signing of the Power Purchase Agreements (PPA). The operators will not face any penalties due to not meeting of operational targets since underperformance will get reflected in their revenues.
The institutional sector (government or private) in the state is entitled to a state government subsidy in addition to Ministry of New and Renewable Energy (MNRE) subsidy. The government of Madhya Pradesh will provide a capital subsidy of 20%, in addition to the subsidy of 30% for private and 25% for government institutions, provided by the Ministry of New and Renewable Energy. The state government under its Madhya Pradesh Urja Vikas Nigam (MPUVNL) will provide half of such subsidy as mobilization advance against bank guarantee to facilitate easy cash flow. The remaining subsidy will be paid once the project starts commercial operation. Despite RESCO mode, the developers would enjoy upfront recovery of almost half of the capital investment.
All sites that have been selected are mostly government buildings and private institutions, which were approached by the agency. All information technical and financial will be made available for the bidders in the site hosted by the department as a part of the RESCO tender. An MPUVNL official confirmed that the PPAs are to be signed within three months of a winning RESCO bid. The projects shall be commissioned within nine months post that.
The move assumes significance in light of the major lag between rooftop and grid level solar capacities coming up in India. The rooftop has been a major disappointment so far, with just over 2 GW out of a possible target of 40GW by 2022 up yet. This move by the MP government is a step towards contributing in a bigger way to that, and assuming that the whole exercise delivers results, will hopefully lead to better clarity on the part of other major states too.