India’s first wind auctions postponed

22 December 2016, Week 50, Issue 539

India’s first reverse auction for wind power has been deferred by three weeks, with the last date for submission of bids extended from December 15 to January 8, 2017. The auction will now open on January 9, pushed back by the same amount from the previous date of December 16.

“There was a pre-bid meeting on November 29 at which developers sought many clarifications. These took a little time to sort out, so the bidding period was extended,” Solar Energy Corporation of India (SECI) managing director Ashvini Kumar explained. SECI, which operates under the Ministry of New and Renewable Energy (MNRE), is co-ordinating the auction. 

Although solar auctions have been a regular feature in India over the last three years, this is the first instance that such bids have been invited for wind. The MNRE aims to auction 10 GW of wind power by 2019 via reverse bidding, with the first 1,000 MW originally planned for this year – although the postponement of the first round suggests that the process may take longer.

The auction begins with a base tariff offered by an authority, with developers bidding at or below the base level. The lowest bidder wins the right to develop the project. Such competitive auctions are expected to lead to a significant drop in the cost of wind power in India, as has been seen in the solar sector, where rates have dropped by over 60% to under 4.5 rupees (US$0.066) per kWh. 

This is essential for renewables, whether wind or solar, to be able to compete with other generators, including coal-based thermal power. Presently, feed-in-tariffs (FiTs) for wind are set by state electricity regulatory authorities. 

The MNRE has identified eight states, Gujarat, Rajasthan, Maharashtra, Madhya Pradesh, Tamil Nadu, Andhra Pradesh Telangana and Karnataka, as endowed with wind speeds high enough to produce power. 

India’s cumulative installed wind power generation capacity is over 28,250 MW, the fourth-largest globally, after China, the US and Germany. The road ahead, however, will be challenging as government incentives such as GBI (generation-based incentive) and AD (accelerated depreciation) are diluted or withdrawn. The wind sector is likely to face difficulties once this state support is curtailed.

The challenges include the reluctance of utilities to buy power from what they consider intermittent sources, the higher cost of wind electricity compared with thermal power, and the long periods that developers must wait to receive payments for their electricity.

New Delhi is expected to announce a package of new measures to boost wind for the financial year 2017-18 in order to meet target of 60,000 MW by 2022, but so far, progress on combatting these issues has been slow. 

Edited by

Andrew Dykes

Editor

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