India Wind Energy Tariffs Rise In Undersubscribed Tender
Wind energy developers quoted higher tariff bids in the latest auction conducted by the Solar Energy Corporation of India. The marginal jump in tariff bids comes at a time when developers are shying away from participating in large solar as well as wind energy auctions.
According to media reports, only two developers were allocated around 440 megawatts of capacity in the 1.8 gigawatt wind energy tender that had been issued by SECI in June. The tender was the eighth national-level wind energy tender issued by SECI. The lowest tariff bid increased from ₹2.79/kWh (3.88US¢/kWh) in the seventh auction to ₹2.83/kWh (3.94US¢/kWh) in the latest auction. The tariff bid is also the highest since March 2018.
SECI had managed to attract bids for just 550 megawatts of capacity from two developers in the technical round. As per regulations, SECI finally offered just 80% of the 550 megawatt capacity in the financial round.
CLP India, an independent power producer in the renewable energy market in India, secured around 250 megawatts of capacity at ₹2.83/kWh (3.94US¢/kWh). This is believed to the first win for CLP India in the 12 wind energy auctions conducted in India to date. A subsidiary of Enel Green Energy had submitted a bid for 300 megawatts but managed to secure only around 190 megawatts as its financial bid was higher than the lowest bid. This is the second win for Enel in Indian wind energy auctions. The company had earlier secured the rights to develop a 285 megawatt project in the fourth national-level auction of the SECI.
The most notable feature of this tender was the absence of market leaders from the technical round itself. Leading wind energy developers in India including ReNew Power, Adani Green Energy and Mytrah Energy have stayed away from some recent tenders. A number of recent events have influenced this behavior of the developers.
The pace of addition of transmission and power evacuation support infrastructure has failed to keep up with the pace of tenders issued by the states and central agencies. Only recently has the government taken measures to speed up the investment into and implementation of new transmission lines in renewable energy hotspots.
The industry has also been very apprehensive of the intentions of some state governments. The government of Gujarat has cancelled and reissued a number of tenders citing high tariff bids as the reason. It recently asked a number of developers to reduce their tariff bids; when most of the developers did not oblige the government refused to allocate projects to them despite them having legitimately participated in the competitive auction.
The threat of possible revision in tariff rates after projects have been commissioned is another risk the companies are facing. The government of Andhra Pradesh had attempted to this a few months back with no end to the matter in sight yet.
Millions of dollars in outstanding dues, lack of liquidity, and falling tariff bid thresholds in tenders are also inhibiting factors faced by the developers.
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