REMCL Tenders For 740 MW Solar Projects On Vacant Railway Land

The Indian Railways, which has set some of the most ambitious targets on net zero among large government owned bodies, has just invited bids for over 740 MW of solar power projects, on vacant railways land. Readers will recall that using railway land across the country for these projects was an integral part of the railway plan to shift to renewable energy. The Railway Energy Management Company Limited (REMCL), a joint venture of the Indian Railways and RITES (Rail India Technical And Engineering Services Limited, a railway PSU), has invited bids for setting up projects totaling 740 MW ground-mount solar project on vacant lands .

The bid submission deadline is August 26, 2021. REMCL has had limited success with its previous tenders, and one hopes this tender will see better results.

Bidder’s will need a minimum net worth of ₹80 lacs /MW of the quoted capacity as of the last date of the previous financial year. The bidder’s minimum annual turnover should be ₹41.45 lacs /MW of the quoted capacity during the last financial year. Successful bidders will enter into a PPA with the relevant zonal railway for the project duration of 25 years, with an all inclusive tariff. We might add here that the railways, as a central PSU effectively, ranks right after NTPC and SECI in terms of credibility on timely payments.

However, it is the profitability requirement that might yet stump quite a few prospective bidders, especially coming off a tough last couple of years. The tender requires the internal resource generation capability in the form of profit before depreciation, interest, and taxes for a minimum amount of ₹830,000 /MW of the quoted capacity as of the last date of the previous financial year. Plus, an in principle approval letter from a recognised lending institution committing a line of credit of ₹10.36 lacs /MW of the quoted capacity.

An EMD of ₹4 lacs/MW is stipulated. While performance bank guarantee (PBG) has been placed at ₹ 8lacs /MW..

Winning bidders will have to take on the responsibility of getting connectivity with the transmission system owned by the state transmission utility or the central transmission utility. Right up to the interconnection point and delivery point where the metering is done for energy accounting. Maintenance of the transmission system up to the interconnection point is also within the bidders mandate.

The annual capacity utilization factor (CUF) has been kept at a relatively conservative 17 percent, even as some recent projects have pushed this figure to 22 percent or higher. The developer will have to maintain generation within + 10% and -15% of the declared CUF value for the first 10 years from the commissioning date. Subject to  a minimum of 15%.  It’s a DCR project, which means all cells, modules and key equipment must be sourced from the MNRE’s ALMM (Approved List of Models and Manufacturers) list.

With projects spread out over a wide region, thanks to the railways sprawling presence across the country, these tenders should normally be a great opportunity for regional EPC’s to win some projects too. However, we do feel that the condition on profitability might be a deal breaker for a few.