Bids closed this Monday for participation in the 750MW REWA Mega Solar Park and we hear the response was overwhelming with more than 20 solar developers vying for over ten times the bid capacity. Solar in Madhya Pradesh wasn’t always considered a good investment, so what made the REWA project so attractive? Here are the key features that make the REWA solar park a sweet deal for offtakers and investors alike.
1. Unique Features of the REWA Solar Park- Upside for Offtakers
1.1 Open Access Offtaker
At REWA, for the first time, a solar park in India is supplying power to an open access consumer, in this case Delhi Metro Railway Corporation (DMRC). DMRC will be purchasing all of their required power, a whopping 121 million units which will account for 20% of the solar park’s electricity generation. For them, this is a purely commercial decision as the supplied electricity is expected to be much cheaper than the tariff they pay Delhi DISCOMs. The other offtaker for the solar park is Madhya Pradesh Power Management Corporation Ltd (MPPMCL) which will buy 80% of the power.
1.2 Guaranteed generation
Typically in Solar parks, the supply is given proportionally to each of the offtakers and thus varies with time of day. In terms of supply, Rewa Ultra Mega Solar (RUMS) Ltd has innovated to benefit their offtakers. All the power will first preferentially be supplied to DMRC until all of their consumption is offset- which is fairly linear throughout the daytime. This unique supply arrangement will ensure that DMRC doesn’t need to rely of any other source for their day time consumption. The balance power will then be supplied to MPPMCL.
2. Unique Features of the REWA Solar Park- Upside for Investors
2.1 Payment Security Mechanism
Investors had been initially wary of signing power purchase agreements which state DISCOMs as most of them are cash strapped. For the Rewa project, a three tier payment security mechanism has been offered which comprises of letter of credit (LC) of 1.25 times average monthly billing for 12 months, Payment Security Fund, to be created by RUMS and state a guarantee for MPPMC’s payment obligation under the PPA. This ensures that investors payments are secure and hence they are more likely to bid aggressively which would bring down the tariff.
2.2 Plug and Play Model
As another unique feature, bidders are not being offered any viability gap funding but will straight enter into a plug and play model with transmission connectivity. This ensures lesser complexity and bidders do not have to worry about bureaucratic process such as land permssions for transmissions.
There are over 34 solar parks in different stages of development in India, we hope they will creatively solve problems like RUMS for rapid implementation of solar power in India.