Tender-based offtake for utility-scale renewables

Much of India's utility-scale renewable capacity has been built by developers who won long-term power purchase agreements through competitive tenders. A procurer invites bids for a quantity of capacity, developers compete on tariff, and winners sign long-term PPAs. Tenders offer revenue certainty, but they demand careful preparation and disciplined execution.

How tenders work

1. Tender issued

A procurer issues a request for selection or similar document specifying:

• Capacity sought
• Technology — solar, wind, hybrid, with or without storage
• Location requirements, if any
• Eligibility criteria — financial and technical
• Bid security requirements
• PPA terms
• Commissioning timelines

2. Bid preparation

Developers assess the opportunity, plan land and grid, estimate costs and prepare bids.

3. Bidding

Bids are typically evaluated on tariff, often through e-reverse auctions after initial technical qualification.

4. Award

Successful bidders receive letters of award and provide performance security.

5. PPA signing

The developer signs a PPA with the procurer (and in some structures, the procurer signs back-to-back agreements with distribution companies).

6. Execution

The developer secures land and connectivity, reaches financial close, builds and commissions within deadlines.

Who procures

• Central agencies acting as intermediaries between developers and distribution companies
• State utilities and agencies procuring for their own needs
• Others, such as public sector enterprises

Each has its own tender terms, PPA structures and payment security mechanisms. Check current tenders on the issuing agencies' websites.

Preparing a bid

Land

Bids depend on having realistic land plans. Developers bidding without identified land risk delays and cost increases after award. See how developers source and qualify land.

Grid

Connectivity availability and timelines must fit the commissioning deadline. See grid connectivity basics.

Resource

Energy yield estimates must be credible. Over-optimistic yield leads to underpriced bids.

Costs

Equipment, EPC, land, financing and O&M costs — with allowance for changes between bid and construction.

Financing

Debt and equity availability at assumed terms.

Risks

Change in law, curtailment, payment delays and delay penalties.

The bidding dilemma

Competitive pressure pushes tariffs down. A bid that wins on aggressive assumptions may struggle if:

• Equipment prices rise
• Land costs or delays exceed expectations
• Grid connectivity is late
• Financing costs rise

Developers must balance winning with delivering profitably.

Post-award obligations

Winning brings obligations:

• Performance security — often a bank guarantee, at risk if milestones are missed
• Milestones — land, financial closure, commissioning
• Commissioning deadline — with penalties for delay
• Reporting — progress updates to the procurer

Key PPA terms in tenders

• Tariff (often fixed for the term)
• Term
• Minimum and maximum generation obligations
• Payment security mechanisms
• Change in law
• Termination

See what is a PPA.

Payment security

Payment security mechanisms — letters of credit, payment security funds or other arrangements — protect developers against delays in payment by distribution companies. Their strength varies between procurers. Lenders scrutinise them closely.

Curtailment

Grid curtailment — instructions to reduce output — affects revenue. How curtailment is compensated depends on PPA terms and regulations. Check terms and regional curtailment history.

Tenders vs C&I

See utility-scale vs C&I solar.

From award to financial close

The months after award are often the most pressured. Land must move from identified to secured, connectivity applications must be made and milestones met, the EPC contract must be finalised and lenders must complete due diligence — all against tender deadlines. Developers who arrive at award with land mapped, records screened and grid options confirmed move through this period far faster than those starting from scratch. A post-award plan with weekly tracking of each milestone keeps the security at risk visible.

Common mistakes

• Bidding without identified land
• Underestimating grid timelines
• Optimistic yield or cost assumptions
• Ignoring penalty exposure for delay
• Weak understanding of payment security

Reading the tender documents

Tender documents are long, and important terms are often in schedules and annexures rather than the main text. Read the draft PPA in full, note every milestone and the security attached to it, and check how changes in law, delays in connectivity and force majeure are treated. Pre-bid meetings and written clarifications are the time to raise ambiguities; after bids are submitted, the terms are usually fixed.

How we help

Through our utility-scale solar work and project advisory, we help developers and IPPs identify and qualify land for bids, assess grid options and coordinate post-award land and approval work to meet milestones.