Solar tender under the Subsidy Scheme: An Overview!

“Knowledge is a process of piling up facts; wisdom lies in their simplification.” 

Martin Luther King Jr

The market for residential solar is booming because more and more people are finally realizing the benefits of installing solar systems at home. With this new-found love for sustainability, the solar market is also facing challenges in the form of rumors and complicated information. One such subject that requires simplification is solar tender under the subsidy scheme in India.

If you’ve been meaning to switch to solar, you too must have come across the concept of L1 prices, subsidies, and empanelled vendors. Switching to solar without the first-hand understanding of these concepts isn’t a wise man’s choice. 

We’ve curated this guide to simplify solar tender for you – what is it, what’s the purpose behind circulating a solar tender, how are L1 prices and subsidies related to solar tender, etc? 

Find yourself in the league of people who want to demystify things too? Then we have news for you. Dive in for details!

What is a Solar Tender under the Subsidy Scheme in Residential Solar?

The primary aim of the Central government is to generate 4GW worth of clean electricity from residential solar installations. And that too, just from individual homeowners. 

In order to achieve this target by the end of December 2024 and implement phase 2 of the grid-connected rooftop solar programme, the MNRE conducted various surveys. Based on those surveys, state-wise solar installation capacity was decided and allocated. 

Now, to get the installation started, MNRE circulated a standard bidding document and floated it to all discoms from different states across India. That bidding document is nothing but the solar tender.

Discoms use the solar tender to invite solar companies to place their bids and earn allocation rights out of the target that’s allocated to their respective states. 

Here’s the sequential series of events:

• MNRE conducts surveys to figure out which state will be able to execute how much solar installation.
• Based on those results, every state is allocated a certain solar installation target. 
• A standard bidding document is then circulated to different discoms. 
• That bidding document becomes the solar tender for the state. 

What is the purpose of Solar Tender in India?

Now that you know what a solar tender is, you might as well be wondering what its purpose is. We have the details. 

A solar tender is basically circulated to discoms all across the country so that the discoms can:

• Invite solar vendors for empanelment (registration)
• Fix the L1 rates of the state 
• Fix the amount of subsidy for the installation of solar systems 
• Begin the installations so that the target can be met

It’s solar vendors that carry out the installations. Hence, the more vendors place their bids, the more are the chances that the discoms will be able to meet the target that’s set for them. 

For instance, Gujarat was assigned a solar installation target of 750 MW. A solar tender was circulated to all discoms. To meet the target, the discoms joined hands and invited solar vendors in the state to place their bids collectively. 

• Different vendors placed their bids to earn certain allocation rights. 
• The vendor that quoted the lowest price for the installation of a solar system earned maximum allocation rights.

State-wise allocation capacities

Here are the details of the allocation capacities for different states. 

Key Things to Remember about a Solar Tender in India 

Now you know almost everything about solar tender’s purpose in India. However, there are a few important things to keep in mind. Have a look!

• A solar tender is valid for 2 years from its date of sanction. 
• All requirements mentioned in the solar tender must be fulfilled by the empanelled vendors when carrying out a solar installation.

Conclusion

We hope that now you’ve understood the entire science behind a solar tender – what it is and its purpose of existence. 

Going solar is the need of the hour and the government is also offering a subsidy on the installation of rooftop on-grid solar systems to homeowners and housing societies. 

Since subsidies will cease to exist once the MNRE hits the target of installing 4 GW worth of solar installation from the residential sector (individual homeowners), it’s the best time to go solar now and take the help of the financial assistance that the government is offering. 

FAQs

1. Are L1 rates for all states the same?

No. L1 rates for all the states in India are different. These rates are also known as discovered rates. 

They’re nothing but the bid placed by the vendor that wins the maximum solar allocation rights in a solar tender.

However, soon the state-run subsidy programme will come to an end. A new nation-wide subsidy scheme – known as DBT – will be the only active scheme. It has a fixed rate. Have a look.

2. What is the purpose of a solar tender under a subsidy scheme in India?

There are 2 basic purposes behind circulating solar tenders:

• Encouraging more and more vendors to get registered so that the state’s solar installation target can be achieved.
• Setting the L1 rates so that the subsidy amount can be fixed.