US firm challenges Tamil Nadu wind energy auction in High Court

National » Solar

BENGALURU: A US-based renewable energy company has moved the Madras High Court challenging the recent wind auction held by Tamil Nadu government, claiming that its bid was unfairly rejected even though it had quoted a tariff lower than the winning bid.

The Tamil Nadu Generation and Distribution Co (Tangedco) held a 500 MW wind auction in end-August where the winning price was Rs 3.42 per kWh. Evergreen Renewables, a subsidiary of Evergreen Power Solutions Inc., has moved the court to stay the entire auction proceedings and set aside Tangedco’s letter rejecting its bid. The firm had quoted a tariff of Rs 3.34 per kWh, Evergreen said in its writ petition.

When it approached Tangedco asking why its bid had not been considered, the latter listed two reasons in its response: “non-satisfaction of the net worth criteria” and “submitting the price bid along with techno-commercial bid”, Evergreen said in its petition.

Both reasons were untenable, the petition claimed. According to the petition, Tangedco in its letter said Evergreen’s bid did not furnish “the equity commitments of the consortium members” while the tender documents had clearly asked for these. Evergreen claimed that the relevant portion of the tender document, if read in its entirety, clearly suggests that these details have to be furnished before signing the energy purchase agreement (EPA), and not before bidding.

“It has been spelt out very clearly that the project company (i.e., the special purpose vehicle for the project) shall be incorporated only if selected, and equity participation of the members shall be shown before the signing of the EPA,” the petition said. “It would be wholly absurd for the consortium…to submit its equity commitment in the project company before the project company is even incorporated.”

On the matter of submitting the techno-commercial bid and the price bid together, the petition claimed that the two bids were in fact submitted as separate annexes, with the latter encrypted, just as the tender documents had directed.

“The petitioner did not include the price bid in the techno-commercial bid section of the online bid,” it claimed. Besides, “the price being uploaded in an encrypted form would not have affected the purity of the tender process in any way”, the company claimed. “Further, the price quoted by the petitioner would have been even lower than what has now been accepted by Tangedco. This would have saved Tangedco a substantial amount over the next 25 years,” it said.

Evergreen has developed over 3,000 MW of solar and wind power in the US, and is currently setting up around 550 MW of wind projects across Tamil Nadu, Gujarat, Karnataka and Madhya Pradesh, the company said. It commissioned its first and only solar project of 11.5 MW in Telangana in April 2016.

In most renewable energy auctions, the procedure is usually to file the techno-commercial bid first. The price bid is submitted only after the techno-commercial bid passes muster because it is considered that mentioning the price alongside the techno-commercial could amount to an attempt to influence selection, especially if the price quoted is competitive. But the Tangedco bid documents, Evergreen’s petition claimed, had made no such stipulation.

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