SECI announces results of Financial Bid opening – Solairedirect, Azure, Sun Edison among winners

SECI had earlier released the list of qualified bidders with an announcement that the financial bids would be opened on 21st February 2014. The opening of the financial bids has now concluded and the preliminary results are available. A cursory glance at the results bring out some interesting facts.

Some notable companies to bag allocations include SEI and Azure Power who were allocated 100 MW each and ACME who bagged about 80 MW worth of projects. Other notable companies that secured an allocation include  IL&FS Energy development with 40 MW, Solairedirect with 30 MW, GPCL with 10 MW and Hero Solar Energy who were allocated 20 MW. It is reported that Tata Power has also been qualified for 35 MW under DCR category, but it is yet to be confirmed.

Some of the big name players – most notably Welspun failed to secure an allocation which is shocking. It appears that another big player – First Solar may not have got an allocation either. Other notable companies which didn’t get an allocation include Shapoorji Pallonji Solar and Renew Solar Power.

It should come as no surprise that the lowest VGF requirements were seen in the case of the open category projects with the lowest requirement standing at 17 lakhs per MW. For a sake of reference, the maximum VGF that can be allocated to any company would be limited to Rs 2.5 crore per MW. In the DCR category, the lowest VGF requirement seen was Rs. 1.36 crores per MW.

The VGF requirement ranges are as follows

  • Open Category
    • Range – 17 Lakhs – 2.49 Crores per MW
    • Average – Rs. 1.57 Crores per Mw
    • Estimated cutoff – Rs. 1.31 Crores per MW
  • DCR Category
    • Range – 1.36 Crores – 2.5 Crores per MW
    • Average – Rs. 2.21 Crores per MW
    • Estimated cutoff – Rs. 2.43 Crores per MW

Assuming the cap of 30% VGF allocation, it can be estimated that under the DCR category we could see the capital cost of projects at Rs. 8 crores per MW in the upper end of the spectrum. The capital costs for the other projects cannot be accurately predicted as there are numerious variables involved which could have affected the final quote (low interest rates, much lower capital cost etc.).

From the preliminary information that is available, it appears that the 375 MW allocation cap under DCR would be reached with a maximum VGF requirement of 2.43 crores per MW with the total capacity exceeding the cap by 5 MW meaning one company might get lower allocation than what was bid for. In the Open category, the cap is reached at a VGF requirement of 1.31 crores per MW. Here too, the last company would fall short by 5 MW (from their intended allocation requirement).

An interesting trend to make note of here is that except for one company, no company has bid the same amount for the various projects they have bid for. This can be interpreted in various ways – the most obvious being cost differences between the DCR and Open category. Another reason could be that the various capacities the company has bid for could be coming up in different locations across the state meaning different CUFs and hence different levellized cost of energy generation. In any case the different bid amounts is a risk mitigation strategy (to ensure allocation and maximize profits).

Please note that the discussion presented here is based on preliminary information and is subject to change. Although we do have an entire list of the VGF bid for, it’s best to wait for SECI to release the list so that the numbers can be verified. An update with the entire list will be posted soon.

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