India’s wind power tariffs remained near a record low in an auction conducted by the state-run Solar Energy Corporation of India (SECI) which ended late Tuesday evening, a person aware of the development said.
Bidders quoted wind power tariffs as low as Rs2.44 per unit for 2 gigawatts (GW) of wind power contracts, the person said, requesting anonymity, adding that this was India’s largest wind capacity auction.
Torrent Power Ltd, ReNew Power Ventures Pvt. Ltd, Green Infra Wind Energy Ltd and Inox Wind Infrastructure Services Ltd bid Rs2.44 per kilowatt hour (kWh) each to win contracts for 499.80 megawatts (MW), 400MW, 300MW and 200MW, respectively. Adani Green Energy (MP) Ltd, Saudi Arabia’s Alfanar and Betam Wind Energy Pvt. Ltd bid Rs2.45 per unit to win contracts for 250MW, 300MW and 50.2MW, respectively.
The latest auction underscores growing investor interest in wind energy projects as costs of turbine generators decline amid a favourable policy environment. Wind power tariffs had plummeted to a record low Rs2.43 per kWh at an auction conducted by state-run Gujarat Urja Vikas Nigam Ltd in December, beating the record low solar tariff of Rs2.44 per unit registered in May.
“Discovery of low wind tariffs is a function of the existing policy, regulatory, market, technological, financial and demand context, along with the bidding structure that the procurer provides,” said Sambitosh Mohapatra, partner, advisory, power and utilities, PwC India. “Investors have their own risk return appetite and strategic intent for a particular bid.”
Torrent Power’s 499.80MW contract win is the highest among all bidders in the auction, the company said in a statement.
Queries emailed to spokespersons for ReNew Power, Inox Wind and Adani Group on Wednesday morning remained unanswered. Alfanar and Betam Wind couldn’t be reached for comments.
A spokesperson for Singapore-based Sembcorp Industries Ltd, which owns Green Infra, said in an emailed response that with this 300MW contract, “Sembcorp has secured approximately 800MW from Indian central wind auctions, the largest among industry participants”.
Renewable power will help India meet its electricity demand as well as reduce pollution.
It will also help the country meet its ambitious clean energy target of 175GW by 2022.
The aggressive bids in the latest auction come at a time when concerns have been expressed over some states looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff.
This concern was flagged in the Economic Survey presented last month. The survey said that India’s quest for low clean energy tariffs “possibly contributed” to demands for renegotiation of the already signed power purchase agreements. This, in turn, may result in legal battles and banks becoming wary of lending to such projects, the survey cautioned.
Tuesday’s tariffs are lower than the average rate of power generated by coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit. The price gap between electricity generated from thermal, solar and wind projects has been bridged as costs of solar modules and wind turbine generators declined by 80% and 20%, respectively, over the past five years.
While solar power tariffs rose to Rs2.65 per kWh at an auction conducted by the Gujarat government in September, last December’s auctions conducted by Solar Energy Corp. threw up winning bids of Rs2.47 and Rs2.48 per unit.
India has lined up an ambitious plan to award 23GW wind power contracts by March 2020. While 100GW of the government’s targeted renewable energy capacity is to come from solar projects by 2022, 60GW is expected to be generated from wind power plants.