India mulling Generation Based Incentive for 5 GW of future solar tenders

India is working on some new rules for 5 GW of solar projects to be tendered over three years, including bidding for a Generation Based Incentive (GBI).

Local consultancy Bridge to India said the renewable energy ministry (MNRE) is finalising the guidelines, with an announcement expected over the next two months. The timing of tenders and the geographical spread will depend on the needs of Indian power utilities.

NTPC Ltd will be the off-taker for the 5 GW. It is expected to set the solar power purchase rate at INR 4.5 (USD 0.067/EUR 0.061) per kWh and urged developers to bid for additional compensation per kWh of produced power via the GBI model.

Bridge to India said it expects the actual GBI for future projects “to be close to zero or even negative”, as recent tenders have shown that solar bids can be very low.

The consultancy also understands that the guidelines could include measures to mitigate grid curtailment risk. The MNRE is working on a compensation scheme for a pre-defined volume of deemed generation each year. Developers could thus be given the right to sell equivalent amount of excess power generation in subsequent years.

“The structure is very restrictive and not sufficiently attractive but the introduction of deemed generation as a concept is very promising for developers. We expect that the compensation structure will improve over time,” Bridge to India said.