Bidders raise concerns over NTPC’s Andaman storage-linked solar project

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NTPC’s storage-linked solar project in the Andaman & Nicobar Islands is facing hiccups at the inception stage itself.

The Centre wants to shift the power eco-system of the islands from diesel power to a 24-hour solar power. But, bidders interested in the project told BusinessLine that they are sceptical there are financial concerns in the project viability.

Those interested in the project include Rays Power Infra, Hero Future Energies and Renew Power and Amplus Solar. Developers say that the currently available technologies in the storage sphere do not allow for a reliable cost projection beyond 10 to 12 years. While the bid asks for 25-year project life of the 17-MW storage-linked power system.

“The batteries will have to be replaced every four years and it will be very difficult to estimate the cost of replacing them for 25 years right now,” a bidder in the NTPC Andaman project said. Another bidder in the project said that the bank guarantee and upfront payments are based on the 25-year life cycle. He said: “If the cost of maintaining these storage linked projects comes down in the future, there is no clarity of whether the bank guarantee and upfront payments will be refunded.”

Unlike storage, purely solar power generation project does not require replacing components regularly. This is why developers are comfortable with a longer project cycle of 25 years in those cases.

Electricity in the Islands is produced through diesel-powered generators. The cost of generation is as high as ₹35 a unit.

Comparably, the cost of diesel generated power in the metro cities is around ₹16 a unit. The higher cost is because diesel is transported to the islands from the mainland through ships and this raises expenses.

Director, India Energy Storage Alliance (IESA), Debi Prasad Dash, said: “More than 40 companies are interested in the Indian market. Renewable companies who are struggling with low prices of solar now want to diversify to storage and start a new line of business.”

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