Recently a US court indictment alleges Gautam Adani, Sagar Adani, and others bribed Indian officials to secure Power Supply Agreements (PSAs) under SECI’s 2019 manufacturing-linked solar tender.

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About Solar Energy Corporation of India (SECI) Ltd

• SECI is the leading Central Public Sector Undertaking (CPSU) dedicated to the development and expansion of Renewable Energy (RE) capacity in India.
• Establishment and Structure: Founded in 2011 as a not-for-profit company under Section 25 of the Companies Act, 1956.
  • Converted to a commercial company in 2015 under Section 3 of the Companies Act, 2013.
• Functions under the Ministry of New and Renewable Energy (MNRE) and was accorded Miniratna Category-I CPSU status.
• Objective: To support India’s National Solar Mission and achieve its Nationally Determined Contributions (NDCs).

Key Roles and Responsibilities of SECI

• Renewable Energy Development: Implements solar, wind, and hybrid energy projects nationwide.
  • Manages over 65.3 GW of awarded renewable energy capacity (40 GW solar, 16.3 GW wind, 9 GW hybrid).
• Energy Procurement and Trading: Procures energy via competitive bidding and sells it to DISCOMs through long-term Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs). It holds a power trading license and actively trades renewable energy.
• Project Implementation: Executes turnkey solar projects for PSUs and government departments.
  • Develops innovative models to expand renewable energy capacity.
• Mission Fulfillment: Supports India’s National Solar Mission and renewable energy targets by developing and expanding clean energy infrastructure..

Solar Bidding in India

• SECI tenders often link solar power generation with module manufacturing, which requires high equity investments.
• The 2019 tender was among the first to combine these activities, creating operational challenges.

Issues regarding Solar Bidding in India

• Tariff Decline and PPA Challenges: Solar tariffs often fall in newer bids, leading DISCOMs to hesitate in honoring earlier PPAs at higher rates.
  • For example PPA signed at ₹2.5/unit is less attractive when newer tariffs drop to ₹2/unit.
• DISCOM Reluctance: Many DISCOMs already meet renewable purchase obligations and delay or avoid signing PPAs to wait for further tariff reductions.
• High Costs of Manufacturing-linked Tenders: Developers face difficulties managing manufacturing and generation simultaneously due to conflicting financial requirements.
• SECI’s Challenges: Difficulty in securing buyers for discovered tariffs and in aligning state DISCOMs with federal renewable energy goals.
• Corruption and Accountability: Allegations of bribery for PSA approvals highlight governance and regulatory concerns within the bidding and agreement processes.

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Way Forward 

• Strengthening Governance: Enhance transparency and accountability through independent audits, robust oversight mechanisms, and stricter anti-corruption frameworks for tendering and approvals.
• Tariff Rationalization: Develop dynamic pricing models to bridge the gap between older and newer tariffs, encouraging DISCOMs to honor PPAs while protecting developers’ interests.
• Promoting Buyer Confidence: Introduce incentives for DISCOMs to prioritize renewable energy procurement, including financial support or subsidies for tariff differences.
• Separation of Functions: Unbundle manufacturing and generation components in tenders to reduce operational and financial burdens on developers, ensuring better participation and execution.

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