Solar Energy Tender

A solar energy tender is a competitive procurement process through which central and state government agencies, primarily SECI, NTPC Renewable Energy, state DISCOMs, and state nodal agencies, invite solar power developers to bid for the right to develop solar capacity and supply electricity at a discovered tariff under a long-term Power Purchase Agreement (PPA).

What is a Solar Energy Tender?

India's solar energy procurement has standardised around the competitive bidding model under the Electricity Act, 2003 and MoP guidelines. The tariff discovery process follows reverse auction principles, developers compete by quoting the lowest tariff (Rs/kWh) at which they will supply solar power.

Types of solar tenders:

• ISTS-connected (Interstate Transmission System): Large utility-scale projects (200-2000 MW) with central transmission access, procured by SECI and NTPC RE
• State procurement: Smaller projects (10-500 MW) procured by state DISCOMs or state nodal agencies with intrastate transmission
• CPSU (Central Public Sector Undertaking) scheme: Government buildings equipped with solar under Make in India requirements
• PM-KUSUM: Solar for agricultural pumps and feeder separation
• RESCO model: Roof-top solar where developer finances, owns, and sells power to building occupant

The tender process:

1. RfS (Request for Selection) or NIT published by agency
2. Bid bond / EMD submission
3. Technical and financial qualification evaluation
4. Reverse auction or sealed bid for tariff discovery
5. Letter of Award to lowest bidder(s)
6. PPA signing and project execution

SECI tenders are the benchmark, tariffs discovered in SECI auctions (Rs 2-3/kWh for solar) set the market rate that state DISCOMs reference in their own procurement.

Why Solar Energy Tenders matter for Indian government suppliers

India's 500 GW renewable energy target by 2030 (with 280 GW solar) requires Rs 15-20 lakh crore of investment, generating massive procurement across project development, module supply, civil works, electrical balance-of-plant, and O&M services. Solar tenders create cascading supply opportunities, every MW of awarded capacity requires Rs 3-4 crore of equipment and construction.

Example

SECI issues a 1,000 MW ISTS solar tender. Ten developers submit bids. The reverse auction runs for three rounds; the final discovered tariff is Rs 2.45/kWh. Three developers are selected with 400, 350, and 250 MW allocations. Each signs a 25-year PPA with SECI. The developers then issue their own tenders for EPC contractors, module suppliers, and civil contractors to build the plants.

Frequently Asked Questions

Who can bid for solar energy tenders?

Eligible bidders are power developers (independent power producers) with minimum net worth of Rs 1 crore per MW bid. This is not an equipment supply tender, the bidder is selected to develop and operate the solar plant for 25 years. Equipment suppliers (module manufacturers, inverter companies, EPC contractors) supply to the selected developer, not directly to the government.

What is the payment security mechanism in solar tenders?

SECI and most DISCOM PPAs include a payment security mechanism: a Letter of Credit (LC) equivalent to 1-2 months of power purchase payment, renewable monthly. This protects developers from DISCOM payment delays, which have historically been a concern in state power procurement.

How are solar module domestic content requirements enforced?

The DCR (Domestic Content Requirement) in certain solar tenders (PM-KUSUM, CPSU scheme) mandates use of Indian-manufactured solar cells and modules. The Approved List of Models and Manufacturers (ALMM) maintained by MNRE lists eligible domestic modules. Only ALMM-listed modules can be used in DCR tenders.

What is the typical project execution period for utility solar tenders?

SECI tenders for utility-scale projects typically allow 18-24 months from PPA signing to commercial operation date (COD). Delays beyond the scheduled COD trigger delay charges (liquidated damages) on the developer. Time overruns in transmission connectivity and land acquisition are common causes of delay.