New Delhi: Two BJP-governed states looking for power suppliers have crafted strikingly similar bidding criteria that perfectly fit the Adani Group’s power generation capacities and plans, reveal documents.

Maharashtra and Rajasthan have in quick succession issued tenders calling for power producers who could supply electricity for 25 years. A key criterion in both the tenders was that the producer should have the capability to supply power generated from both solar and thermal power plants together.

By introducing the bid specification that only power producers who can generate mammoth thermal and solar capacity in tandem can compete, the state governments whittled down the competition for Adani Group.

Maharashtra put out a bid for 6,600 MW, with 5,000 MW of that coming from solar and the rest from coal. Next, Rajasthan put out a bid for 11,200 MW, with 8,000 MW being generated from solar and the rest from coal. Besides Adani Group, only a few companies operate at that scale in both solar and thermal power generation.

The Adani Group has won the contract in Maharashtra to supply power, which in its words “was the largest award of solar capacity made globally”. Though the tender has not been finalised yet in Rajasthan, its requirements and Adani Group's ground plan for power generation were a match made in heaven, just like how it was in Maharashtra’s bid documents. Adani Group is a frontrunner in Rajasthan.

In the past, a power producer was expected to deliver electricity either from a coal-fired or a renewable source, but the criterion that requires producers to bundle electricity generated from different sources is new in the energy sector.

The two BJP-governed states’ decision to introduce the twin-source criterion in the bidding process has put at a disadvantage small players who have mushroomed in the renewable energy sector. This has also limited the competition to a few firms with the capacity to fire up both thermal and solar power, with Adani Group being the largest private player in terms of combined capacity.

Restricting competition in the power sector may potentially lead to higher electricity costs for people. In addition, the state governments’ push to promote only power producers who can supply thermal and solar power together would stifle competition in the renewable sector and decrease the potential for lower energy prices.

The thumb rule in awarding any government contract is that competition must be encouraged. The Supreme Court judgments such as the landmark 2014 coal scam ruling that opened up coal mines to auction, too, had made it clear that the government should ensure maximum competition to arrive at the best possible price for any asset that’s being procured or auctioned off.

But in this case, the state governments have by design restricted the competition to a few major players. In financial terms, any such move by a government that favours some players over others by tailoring unique standards and technical conditions is frowned upon as cronyism.

Experts have faulted the states’ decision to look for a single supplier with twin energy sources, purportedly to promote the share of renewable energy and reduce carbon footprints. They argue that governments should buy power from different energy sources separately rather than looking for an individual supplier.

“Governments should auction for solar power separately from thermal power,” said Dr Priyanshu Gupta, a researcher on the energy sector for the past decade.

Providential coincidence?

A review of the bid documents by The Collective has also revealed that not only did the bid conditions limit the competition to producers with twin-source capacity but also, they were magically in sync with Adani Group’s upcoming power production plans.

In the case of Maharashtra, the tender document allowed the power producer to install a thermal power plant with 1,600-megawatt (MW) capacity anywhere in the country and source solar power from outside the state.

This fits perfectly with Adani Group’s plans to set up new thermal power units in three states – each of 1,600 MW capacity —and source solar power from the world’s largest renewable energy park in Gujarat’s Kutch district that began production early this year.

Then consider Rajasthan’s tender: It requires that the winning bidder provide 3,200 MW of thermal power and 8,000 MW of solar electricity in a bundle. And, the power plants should be set up within the state boundary. 

Call it a providential coincidence, but just before the tender was issued, Adani Group had begun the process to secure a green nod to expand its existing thermal power plant by 3,200 MW in Kawai village in Baran district of Rajasthan. Similarly, it had also signed an MoU with the government to develop a solar park in the state.

The Kawai plant’s extended capacity and the location of the group’s both thermal and solar plants fulfil the bid requirements of Rajasthan government-owned power distributor company Rajasthan Urja Vikas and IT Services Limited or RUVITSL.

An Adani Power spokesperson in response to The Collective’s queries about the Maharashtra tender aligning with the group’s expansion plans said: “These questions can only be answered by the tendering authority.” The ongoing expansion plan at our Kawai Plant is independent of the outcome of the RUVITSL tender, which is yet to be awarded,” it added, referring to its plant in Rajasthan and the tender issued by the state’s electricity distributor.

The Collective sent detailed queries to both state electricity distributors but neither have responded despite repeated reminders.

Adani Group boasts of being India's largest renewable energy player, and earlier this year became the first Indian player to surpass 10,000 MW operational portfolio, with 7,393 MW of that coming from solar alone. 

Simultaneously, it is also India’s biggest private thermal power player with an installed capacity of over 15,000 MW.  However, it is not the only big player in the energy sector trying to expand into both the sunset coal-based power generation business even as it ramps up its market share in the sunrise solar power segment. Others such as JSW Group are also trying to do the same though they lag behind the Adani Group.

But the BJP-ruled state governments’ bonanza to Adani by crafting tenders beholden to the billionaire will further bolster the allegation that it was Gautam Adani’s close relation to Prime Minister Narendra Modi that played a significant role in the tycoon’s swift rise.

Maharashtra Creates Trend

On March 13, 2024, the state-owned Maharashtra State Electricity Distribution Company Limited, which distributes electricity across the western state, issued a tender inviting bids to supply power.

A power producer who quotes the lowest rate at which it would sell electricity to the distributor bags the tender. The bidding for procuring electricity for 25 years would have been an everyday deal but for the state-owned firm’s caveat. Bidders for this tender would have to mandatorily supply electricity from two sources: 1,600 MW from coal-based thermal plant and 5,000 MW from solar plant.

The tender, one of the first of its kind to ask bidders to bundle thermal and solar power, raised eyebrows in the state. The Indian National Congress, in Opposition, alleged the tender was designed by the ruling alliance of Shiv Sena, NCP and BJP to favour the Adani Group.

For meeting the 1,600 MW thermal power supply quota, the tender said: “the developer may install a new project at any location as per its preference within or outside the State of Maharashtra.” Similarly, in the case of solar power, the developer could source it from anywhere in the country.

Adani Power has at least three upcoming thermal power projects, one in Uttar Pradesh’s Mirzapur, one in Madhya Pradesh’s Mahan coal belt and third in Chhattisgarh, and all three are of 1,600 MW capacity.

The conditions stipulated in the Maharashtra tender seemed to align perfectly with Adani Group’s plans.

According to media reports, a total of four firms, including Adani Group JSW Energy and Torrent Power, participated in the tender. On September 15, 2024, the Adani Group bagged the tender.

A press release by Adani Group said, Adani Green would supply the solar-sourced power from a renewable energy park being built in Gujarat’s Kutch district. And, coal-derived thermal power would come from Adani Power’s “new 1,600 MW ultra-supercritical thermal power project”.

Rajasthan Follows

A fortnight after Maharashtra issued the tender, on March 28, 2024, Adani Power applied for an environmental clearance for expansion of its coal-fired thermal power plant in Rajasthan’s Kawai.

The plant at present has two units of 660 MW capacity each – totalling 1,320 MW – catering to Rajasthan government-owned Rajasthan Rajya Vidyut Utpadan Nigam Limited. Adani Power wanted to add four new units of 800 MW capacity each. The expanded capacity would be 3,200 MW, an addition of over double the existing amount.

A little over a month after Adani Group applied for green clearance, the Rajasthan government-owned electricity distributor Rajasthan Urja Vikas and IT Services Limited issued a tender for a long-term power purchase agreement. It had a requirement of 3,200 MW, exactly matching Adani’s proposed expansion.

Just like the Maharashtra power distributor, the Rajasthan Urja Vikas had made it mandatory for power producers to supply power from both coal-fired and solar power plants.

In Rajasthan’s case, the tender required a bidder to supply 8,000 MW of solar power and 3,200 MW of thermal power.

There was slight tweak in the Rajasthan tender criteria from that of Maharashtra’s: “The developer may install a new project anywhere in Rajasthan”. 

So, while Maharashtra allowed bidders to install thermal and solar power projects outside the state, Rajasthan wanted the plants to come up within the state. This requirement dovetailed with Adani Group’s plan to expand the thermal and solar capacity in Rajasthan.

Rajasthan further narrowed down the criteria, granting added advantage to Adani Group over others. Its tender barred players looking to bid by expanding existing solar capacity, and allowed only those planning a new  solar plant.

The Adani Group has signed an MoU with Rajasthan government to develop a 10,000 MW solar park within the state.

“Bad For Competition”

Power sector watchers are not happy with this new trend.

In a column for The Indian Express, researchers from energy sector think tank Prayas were critical of the two tenders for whittling down competition.

“The RE (Renewable Energy) sector has lower entry barriers compared to traditional power sources encouraging participation from big as well as small players,” they wrote, ascribing rising power capacity and decreasing power prices to shorter gestation periods and lower investment requirements among other factors.

To meet the stiff targets for solar power under the Paris Agreement on climate change, the government has over the past nine years been promoting solar power production in India, rapidly increasing the number of players. Along with technological advances, this competition has substantially reduced solar power prices. 

Experts encourage states to not lock large solar capacities or bundle them with thermal power suppliers. This is to ensure states are not locked into high tariffs for 25 years while there are chances that solar power prices could come down further or that technology could evolve to some other source of power in the two-and-a-half-decade period.

“A recent development threatens this positive trend,” they warned, referring to tenders that now limit the competition to only power producers who can offer both thermal and solar power in their bids.

“This approach effectively excludes many players from the bidding process,” they added.

“We are going through an energy transition phase. Ideally, governments should tie up with solar power for the long term and bring in thermal power intermittently to fill in the gaps,” Dr Gupta told The Collective.

“With the way these tenders are structured, it’s the government-owned companies that are bearing the risk of energy transition while the private sector only enjoys the profits. It should have been the other way around.”

With Maharashtra polls later this year, the Opposition has capitalised on the controversial power tender and Adani Group’s win to haul the BJP-led alliance over the coals.‍