Developing a standardised procurement process that can be replicated across multiple solar projects

REWA Solar Park PPP

The planned 750MW Rewa Solar Project in the state of Madhya Pradesh will be one of the world’s largest solar photovoltaic (PV) projects
It plans to sell electric power not only in Madhya Pradesh, but also across state boundaries under India’s Open Access rules

There were various barriers to private investment e.g. complex regulatory environments, lack of a robust pipeline of projects that reduced investor appetite for India's infrastructure projects
Although solar plants can be profitable, investors were concerned with inadequate infrastructure, challenges in obtaining land, and a lack of familiarity with the sector

“Scaling” is an approach by the International Finance Corporation (IFC) to develop a robust PPP model for a single deal which can then be replicated. The Rewa project was a part of the IFC's approach, which included financial support for environmental and social management in addition to the direct support of the REWA project
The REWA Solar Park received World Bank and Clean Tech Fund (CTF) financing on favorable terms

IFC – Lead transaction adviser
Rewa Ultra Mega Solar Limited Company (RUMSL) –
Project implementing agency which is a 50:50 joint venture between Madhya Pradesh Urja Vikas Nigam Limited (MPUVN) and Solar Energy Corporation of India (SECI)
Madhya Pradesh Power Management Company Limited (MPPMCL) and Delhi Metro Rail Corporation (DMRC) – Offtaker purchasing the generated power

The project was split into three different units of 250MW each which were processed simultaneously, proving the bankability of the scaling concept
Favorable World Bank and CTF loan terms helped reduce electricity tariffs by about 0.07 US¢/kWh
An internet-based reverse auction process provided flexibility and thus triggered greater competition, generating 20 bids totalling 7,500 MW. International bidders also took part, a first in state-level auctions
The Rewa project was the first large-scale project in India in which the renewable energy tariff of 5.5 US¢/kWh breached grid parity1. It also managed to achieve a tariff that was 24% below the lowest tariff for national entities while avoiding the need
for subsidies

Engaging the World Bank and the IFC during the planning stage provides confidence that environmental and social issues will be addressed, thereby removing roadblocks to private sector investment
Having a balanced risk allocation and adopting international contractual standards2 can help bring down costs more effectively than through direct subsidies
Online reverse auction process demonstrated the use of iterative price discovery; bidders could bid separately for each 250MW unit size, with the lowest initial tariff selected as starting price for a reverse auction process