Venugopal from EAI consulting team was at the pre-bid meeting that took place last Friday (Dec 14) and the following are what he has to say (this is in regard to the AP solar policy for 1000 MW power purchase that was released recently)
Highlights
1. Lack of clarity – Overall, the policy makers do not appear to have done their homework fully; as a result, there were quite a few questions to which answers were not available or were vague
2. No payment security mechanism. AP is not TN, but people plonking in 100s of crores are going to expect something more than the utility’s good intentions alone when it comes to payment
3. Benchmark costs – Benchmark costs to be announced AFTER bidding process unlike other states’ policies. CERC CUF will be used as reference. Might not hold good for this state. (I read somewhere that AP is looking at price in the range Rs 6.5-7.5; is this an official estimate or just opinions? – Question from Narsi)
Our specialty focus areas include 
4. Processing fee – Bid processing fee too high@ Rs 2 lakhs as compared to Rs. 10,000 for Rajasthan & Tamil Nadu. Their reasoning of this being done to keep away random applicants does not sound reasonable.
5. No mention of load flow study. (Similar to TN, were there any sub-station capacities mentioned? – Question from Narsi)
Clarifications
1. Whether one company/consortium has to pay Rs 2 lakhs for each bid for processing if they submit multiple bids at different locations.
2. Timelines will be re-examined
Other Comments/Opinions
1. The team was not prepared well enough. For all its ills, the TN utility appeared to done a much better homework in this connection.
2. The utility re-iterated that L1 would be the contract PPA price and this would receive top priority over and above any other criteria. So, will it be similar to TN where everyone will be asked to re-bid at L1?
3. No deemed generation clause which protects loss of revenues to developers in case of grid failure although developer is penalized if plant performs below a benchmark set by the state. Sounds like a double whammy to the developer.
4. Odisha just announced bid winners with 7.25 being the winning bid. A similar price is expected in AP.
Summary
It appears that AP will have to do a lot of work on its RFS document if it likes to convey to the market that it is taking this seriously. It might help if the state utilities from states keen on solar met up and shared notes. Could result in a far more robust procedures.
I will polish this further during the day. Will be glad to have comments from those who had attended as well as others. You can add your comments below or send me an email – narsi at eai.in
How many people attended the pre-bid meeting?
Accelerated Depreciation was not talked about in the RFS. Bidder availing AD & the bidder not availing AD fall under same
competition. If these two segments of people have to compete,
one segment will have unfair advantage. Overall, I strongly agree that no proper groundwork is done.
The lack of payment security is surprising. This will raise the cost of financing for bidders, which will either increase the bid rate or give them thinner margins which might not be enough to cushion any shocks along the way.
Just like load shedding some of the state electricity boards go for generation shedding resulting in loss of revenue for developer.so generation shedding should be considered as deemed generation.
payment from the govt.will normally delayed and the developer has to lose a lot.so the govt should ensure bank interest for the delayed payment.