SECI’s 97.5 MW Tender for Government Rooftop Solar Projects Shrinks Under Challenges
Many players backed out as they could not find any government clients to execute the projects
The Solar Energy Corporation of India’s (SECI) tender for 97.5 MW of rooftop solar projects on government buildings across India is a story of inordinate delays due to frequent timeline extensions, inadequate bidder interest, and many bidders backing out of their projects.
It has been over three and a half years since the tender was initially floated, but only less than half of the initially tendered capacity has been commissioned. The projects were to be executed under the CAPEX (capital expenditure borne by the rooftop owner) or RESCO (renewable energy service company under which the installer provides CAPEX) models.
While the original tender issued in February 2019 was for 97.5 MW, research by Mercom revealed that the re-tendered capacity was only for 75.38 MW. According to Mercom research data, only 41.97 MW of projects had been commissioned as of August 2021.
Many players Mercom spoke to said they backed out due to the increase in raw material prices. The frequent extensions of timelines by SECI was another reason for the developers to withdraw from the tender.
Some developers said that they could not find any government institutions to execute the project. The government entities either could not mobilize funds or wanted the projects to be implemented through the RESCO model.
Many installers felt that the projects were unviable and had exceeded their budgets. But they chose to go ahead with the projects so that their eligibility for future tenders would not be at stake.
According to the bidders, there were a lot of delays from SECI’s side. The initial bid extension was until March 14, 2019, but SECI announced the extension date only a day before. The tender was also annulled once and reissued because the e-tendering service provider discontinued its services.
In January 2020, SECI announced the list of successful bidders. In September 2020, SECI again extended the timelines for the tender in the backdrop of disruptions caused due to the Covid-19 pandemic outbreak and the subsequent lockdown.
Ambiguous subsidy terms
Mercom spoke with the general manager of a company that was one of the bidders. He said, “The main challenge was in finding government clients due to Covid. While SECI was quite cooperative, many companies, including us, misinterpreted the subsidy rates, due to which the entire calculation changed, and the process took too long. It was written very ambiguously because of which a lot of companies misinterpreted it. SECI should be very clear in the future. We are implementing projects in a state that has no subsidies for net metering.”
“The government needs to be more proactive when it comes to legislation. One major problem is that some companies bid very low (L1) and later withdraw from the project. Other bidders are compelled to match the L1 bids despite being unaffordable. The implementing agencies need to avoid this, at least accept the L2 (second-lowest) bids in such cases or put a ceiling on the bid amount.”
Another developer hinted that the reason players might have backed out after winning the tender could be the hike in the prices of steel and copper, difficulty in the transportation of material, and less availability of labor in many places due to Covid-19 restrictions. He also said that the hike in import duties and shortage in supply of polycrystalline solar modules could also have prompted the withdrawals by developers.
The head of a company that had won a 1 MW bid said, “We had chosen a steel plant as our project, but due to the price escalation post the imposition of import duties, we could not afford the project and backed out. Also, we were not fine with the subsidy calculation. SECI provided a 25% subsidy on the base cost, whereas we wanted them to provide the subsidy on the total cost. Also, the subsidy was going to be disbursed over five years. In the future, we might want to reapply for the project if our terms are met and there are no liquidated damages.”
Not all developers had a grouse with SECI. The head of a company that had installed a rooftop solar system in a premier institution said,” The project was executed on multiple buildings and commissioned in July 2021. SECI gave an extension, and no penalty was imposed. We did not face any other problems apart from Covid-related issues. The other companies must have backed out, maybe because of lockdown uncertainties or inability to sign the PPAs. We followed a market model where we were supposed to find the clients. That might have been a problem for some.”
The Haryana Renewable Energy Development Agency (HAREDA) had facilitated power purchase agreements (PPA) for 3.75 MW of rooftop solar projects in five universities in Haryana at a tariff of ₹3.33 (~$0.046)/kWh for 25 years. This project fell under SECI’s 97.5 MW rooftop tender.
Developers’ complaints not valid: SECI
A SECI official said that extensions were provided to installers due to Covid-19 related delays. Some empaneled players had backed out of the projects due to an increase in commodity prices.
He contended that the reasons given by companies for giving up on projects are not valid since the list of projects was disclosed in the tender. After signing the agreements, they should not have raised such issues, he said.
According to him, the government buildings on which the rooftop solar projects were to be installed were chosen through an open process. SECI had approached a few institutions and the other way around.
The official said he could not disclose when the unallocated capacities would be allocated since the projects are ongoing and installers have been given timeline extensions.