Gujarat Solar Power Policy- Debate over lack of competitive bidding

As readers of Panchabuta are aware, the two initiatives leading the way in Solar in India are the state policy of the Gujarat state government and the Jawaharlal Nehru National Solar Mission.

Further, under the National Solar Mission, the government has taken multiple approaches.  NTPC Vidyut Vyapar Nigam Limited (NVVN) has selected 620 MW capacity grid solar power projects (connected to 33 KV and above) through a tariff discounting process in December, 2010.

 Under the scheme  to support small grid connected solar power projects of a capacity up to 2 MW (connected to grid below 33 KV) the Indian Renewable Energy Development Agency (IREDA) has selected 78 projects to set up 98 MW capacity solar power plants in 12 States. In this scheme, the solar power will be purchased by the concerned state utilities at a rate fixed by the respective State Electricity Regulatory Commissions.

Further, 16 projects were qualified for migration to Jawaharlal Nehru National Solar Mission (JNNSM) to set up to 84 MW capacity. Under this scheme, the power will be purchased at the CERC notified tariff then. The dead lines for these projects at that time of announcement was scheduled to be the middle of this year.

Gujarat has released a state specific  solar policy with an ambitious target of installing 1,000 Mw solar power capacity by the end of 2012 and 3,000 Mw in next five years. The state has already signed PPAs for about 934MW. The tariffs have been fixed in the case of Gujarat.

A lot of discussions have been going on the relative merits and demerits of both the national solar mission policy and the Gujarat state policy and both do have their advantages and disadvantages.

It is in this context that the national solar mission policy has come under a lot of criticism from prospective developers.

However in a rare instance, according to this report, Gujarat government and opposition sparred over the solar power policy in the assembly last week. The opposition alleged that the government had not followed the proper procedure while framing the policy, while the government stated that the opposition had got its facts wrong.

During the discussion on supplementary budget demands of around Rs770 crore for the current year, leader of opposition Shaktisinh Gohil said the demand should not be accepted. He alleged that the government had not followed the proper procedures while finalising tariff under the solar power policy.

“The state government has signed power purchase agreements with developers at a price of Rs15 per unit for a period of 25 years, without competitive bidding. The tariff is much higher than the tariff of Rs2.20 per unit at which the Centre sells solar power,” he said, the report further added.

There is a lot more projects that are expected to be announced in Solar this year with the state of  Rajasthan expected to come out with a policy for a planned capacity 550MW for which there could be a reverse bidding process to short list the developers like the National Solar Mission.

It will be interesting to see the approach that various state governments take for their policy announcements.