GUVNL Secures Competitive Solar Power Tariffs Through Transparent Bidding Process

Gujarat Urja Vikas Nigam Limited (GUVNL) recently initiated a competitive bidding process to procure power from grid-connected solar photovoltaic projects. This was done to meet the solar renewable purchase obligation (RPO) targets set by the government. The tender, identified as RfS No. GUVNL/600 MW/Khavda/Solar (Phase XXI), was floated on July 4, 2023. The objective was to secure 600 MW of power from solar projects to be established in the renewable energy park at Khavda, with an additional greenshoe option for another 600 MW.

The tender process was meticulously planned and executed, adhering to the guidelines issued by the Ministry of Power. These guidelines ensure transparency and fairness in the bidding process. The process included an e-reverse auction, which is a modern, electronic method of conducting auctions to discover the lowest possible tariff.

The tender attracted considerable interest, with five bidders submitting their proposals. These proposals were evaluated based on technical and financial criteria. The evaluation committee, comprising senior officials from GUVNL, conducted a thorough assessment of each bid to ensure compliance with the stipulated guidelines.

The financial bids were opened on January 25, 2024, and the e-reverse auction was conducted on the same day. The auction saw competitive bidding, with tariffs ranging between Rs. 2.54 and Rs. 2.55 per kWh. SJVN Green Energy Limited emerged as the lowest bidder, quoting a tariff of Rs. 2.54 per kWh for a capacity of 100 MW. SAEL Industries Limited and Coal India Limited also submitted competitive bids, securing 200 MW and 300 MW, respectively, at Rs. 2.55 per kWh each.

The successful bidders were awarded a total capacity of 600 MW, with an additional 600 MW under the greenshoe option. The greenshoe option allows for the additional capacity to be procured at the lowest discovered tariff, which in this case was Rs. 2.54 per kWh.

Following the auction, Letters of Intent (LoIs) were issued to the successful bidders on March 11, 2024. These letters formalize the award and outline the terms and conditions under which the power purchase agreements (PPAs) will be signed. The PPAs are expected to be executed within 30 days of issuing the LoIs, subject to approval by the Gujarat Electricity Regulatory Commission (GERC).

The entire bidding process was conducted transparently, and the tariffs discovered through the competitive bidding are significantly lower than the prevailing tariffs for thermal power. This is expected to help GUVNL and its distribution companies achieve their RPO targets while keeping the overall power purchase cost under control.

The Ministry of Power has recently issued new guidelines for the tariff-based competitive bidding process for procuring power from solar PV projects. These guidelines emphasize the need for a transparent and standardized process to ensure fairness in the procurement of renewable energy. GUVNL has sought and received approval for certain deviations from these guidelines to address specific requirements of the solar tenders.

The competitive bidding process initiated by GUVNL reflects its commitment to increasing the share of renewable energy in its power portfolio. By securing power at competitive tariffs, GUVNL is not only contributing to the state’s renewable energy targets but also ensuring cost-effective power procurement for its consumers.

The successful completion of this bidding process marks a significant milestone in GUVNL’s efforts to promote renewable energy and achieve its RPO targets. The addition of 600 MW of solar power, with the potential to increase to 1200 MW under the greenshoe option, will enhance the state’s renewable energy capacity and contribute to a greener and more sustainable energy future.

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