The government’s bid to finalise tenders for solar power and encourage generation of non-conventional energy to meet the gap in the demand and supply from conventional sources may not be a smooth affair.

It may even lead to cancellation of the present bids and going in for re-tendering at the end of 30 days time, if solar power developers back out to generate solar power at the tariff announced by the State.

The bench mark rate of Rs. 6.49 finalised by the Cabinet Sub-Committee is not viable, solar power developers claim.

While the State, through AP Transco, invited bids from the private developers to generate about 1,000 MW of solar power, 331 bids were submitted for generating 1,780 MW. Only 13 bids for generating 56 MW were received at below Rs.7 a unit, while 107 bids were for generating 593 MW at Rs.8 to Rs.8.50 per unit.

The bids submitted quoted price in the range of below Rs.7 to above Rs.15.50 a unit. Though the government gave 30 days time to respond to the price offered by the State, sources believe that the whole issue may be heading for re-tendering.

If the price offered by the government is not acceptable to the developers that would be in force for 25 years, there is no way to increase the unit price arbitrarily by the government. It has to necessarily cancel the present competitive bids and call for fresh bids, they added. On the other hand, the government is toying with the idea of approving the projects even if they offered a capacity of 50 MW and above at the price announced by it. A senior official said that the statutory requirement to generate non-conventional energy fixed by the APREC was 100 MW only.

“By 2014 if all things go well, we will be reasonably comfortable in power generation and power will be available at Rs.6 or Rs.7 a unit. In such a scenario, committing for a higher price for solar energy 25 years can turn out to be a bad decision,” a senior official said