New Delhi-headquartered Azure Power has received a letter of award from the Solar Energy Corporation of India (SECI) to develop 2 GW of grid connected solar generation capacity, with an option to double the figure.
The developer secured the capacity under SECI’s manufacturing-linked tender, in return for committing to establish 500 MW of annual cell and module manufacturing capacity. Azure has an agreement with an Indian solar panel manufacturer to jointly establish the production lines with Azure holding a majority stake and committing to an equity investment of around 26%.
SECI will sign a 25-year power purchase agreement with Azure committing to pay Rs2.92/kWh ($0.041) for the solar electricity generated by the project capacity.
Option to double-up
The solar power project capacity – which can be developed anywhere in India – is expected to be commissioned in annual 500 MW phases with the first slice expected to be commissioned by 2022 and the full, 2 GW complete by 2025. A ‘greenshoe’ option in the contract offers Azure the option of doubling the capacity awarded, to 4 GW, although a decision on that must be reached by Tuesday. The contract also includes a waiver of interstate transmission system [ISTS] charges and guarantees against curtailment of the electricity generated.
“This opportunity is attractive to us for many reasons,” said Azure Power CEO Ranjit Gupta, in a press release issued to announce the deal. “The tariff is 8% higher than the last discovered tariff for an ISTS project with SECI, which is one of the best solar counterparties in India. Now with a 5 GW portfolio, our scale and the predictability of our growth over the next five years should allow us to capture significant efficiencies.”
Azure Power was the only developer to consistently demonstrate interest a manufacturing-linked tender which suffered multiple revisions, downsizing and delays. The tender ultimately aimed to allocate 7 GW of solar generation capacity in return for the establishment of 2 GW of annual manufacturing capacity.