SECI’s largest 1GW Rooftop Solar Tender a good start to 2017, but more needs to be done

Arpit | 15th December 2016

SECI’s largest 1GW Rooftop Solar Tender a good start to 2017, but more needs to be done
1gw-highlights

In a major move to push the adaptation of rooftop solar market and march towards the Solar Mission target of 40 GW by 2022, Solar Energy Corporation of India Limited (SECI) has floated a Request for Service (RfS) for implementing 1000 MW grid connected rooftop Solar PV systems for pre-identified central government owned buildings. The tender includes both CAPEX and RESCO models and invites bids from solar installers and developers from across all the states and Union Territories in India. This is by far the largest rooftop tender we have seen in India.

The news comes on the back of the 500 MW SECI rooftop tender that is offering a subsidy of up to 30% - 70% for residential, institutional and social customers for a limited period. Of the 500 MW on auction, 432 MW was awarded to 122 developers. You can read more about the 500 MW rooftop tender here.

Out of the 1000 MW, a capacity of 700 MW has been kept aside for the RESCO ownership model (also known as OPEX), where the developers will both, finance and own the solar system and in the process sell power to the government departments at a fixed cost as per a 25 year long PPA. The remaining 300MW has been allocated towards the CAPEX ownership model where the department or the building will purchase and setup the units on their own rooftops. The statewide bidding for the tender will see the bidders trying to match the lowest bid in their respective states. It is mandated that the winning bidders will sign the Power Purchase Agreements (PPA) and the Engineering Procurement Contracts (EPC) within six months and complete the construction, making the plant operational in 15 months time from the date they are awarded the contract.

SECI to its credit has already identified suitable rooftops for the program, with over 70% of the capacity being kept aside for the Ministry of Human Resources and Development. This would imply that maximum of the systems will be installed on educational and training institutes. Gujarat is expected to be a home to 267 MW of the capacity, with Uttar Pradesh, Maharashtra, Delhi and Telangana providing a strong push too.

MYSUN’s take on this tender:

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  • 1GW addition to the solar rooftop market is a great start to 2017 and really sets the stage for more such projects for the year.
  • Going by the last 500 MW tender, we expect the tariffs and price of the solar system to get even more competitive. This is primarily on three accounts - one, the module prices are expected to be low in the first half of the year and second, the interest rates are on a downward trajectory and third, the capital subsidy ranging between 35% - 90% earmarked for these projects.
  • The largest factor will be the perceived offtaker risk. Since the offtakers, in this case, are government departments, the developers are expected to be a bit more aggressive while bidding.
  • The tender allows 15 months from the award of the contract to complete project execution in comparison to only 12 months in the 500 MW tender. This is a welcome step since it will allow the installers and developers more time to better plan and execute the projects. However, unlike the 500 MW tender, the bidders who win in 1GW tender will not get full payments up front and the incentives will be released stepwise as the developer meets the timelines and targets.

More installations will add more confidence and faith into consumers when it comes to trusting rooftop solar. But for India to reach closer to its 40GW target, the government should not just rely on such tenders as most of these are subsidy based projects which mean there is a huge cost to the exchequer. We strongly believe that the government of India should put more focus on making buying and installation of solar systems simpler for consumers. That will have a spiraling effect on the entire rooftop solar market across consumer categories and will surely help India achieve its targets under the National Solar Mission.

Image Source: NPRI

Chandigarh (CREST) Announces a Solar Subsidy of 30% and an Incentive of a Cash Reward of Rs 1,00,000 to the best Performing RWA to Propel Rooftop Solar

Arpit | 7th December 2016

Chandigarh (CREST) Announces a Solar Subsidy of 30% and an Incentive of a Cash Reward of Rs 1,00,000 to the best Performing RWA to Propel Rooftop Solar

In a bid to push the interest and encourage consumers to go solar, the Administration of Chandigarh has announced a subsidy of 30%, with a target of achieving 50MW by 2022. With costs of solar power anyway at an all time low, this subsidy would only make the grass even greener. Kirron Kher, a famous actress and Member of Parliament speaking at an inauguration of a solar project in Chandigarh supported the move and urged the residents to make most of the opportunity and to invest in rooftop solar.

In an attempt to find out what this subsidy would mean for an average residential customer in Chandigarh, we ran his case through our proprietary MYSUN Solar Calculator. We assumed that the bill of the residential customer is Rs 4,000 and found that without any subsidy, he stands to save up to Rs 609 on his monthly bill. This translates into a Return on Investment of 24.6% annually, without any subsidy. Take into consideration this 30% subsidy that would be available and you are looking at returns in the range 50% year on year, with the total cost of just Rs 22,445. While the figures may seems way too good to be true, they are real.

Apart from this subsidy from the centre, CREST or Chandigarh Renewable Energy Science & Technology Promotion Society is also offering a handsome reward of Rs 1,00,000 award to the RWA that performs the best in Chandigarh in terms of solar, thereby ensuring that there is not just enough interest among individual residents in going solar but also ensuring that there is a strong word of mouth and the neighbours are also enrolled. CREST officials are targeting installations of more than 2,000 residential homes within a year thanks to this incentive. Although Chandigarh ranks on top when it comes to cities with rooftop installations in India on Government buildings, the growth has been slow on private rooftops. This has been primarily attributed to lack of awareness and information among the residents. With an award for the RWA, you would expect a lot of community effort will go into pushing the initiative.

You can also avail solar capital subsidy for schools, colleges, hospitals, NGOs, etc. Please read more about this subsidy here.

While you should anyway register your rooftop on MYSUN when you decide to go solar and we will duly connect you to the right developers and partners in Chandigarh to help you go solar, you can also visit the website of CREST which has more information. So hurry up and make most of the opportunity and go solar. If you are not from Chandigarh, you need not get disappointed as SECI (under MNRE) has also announced a subsidy of at least 30% for all the states and UTs in India, and you can read more about the same here .