Mumbai: India’s first reverse auction for wind power by state-run Solar Energy Corp. of India (SECI) on Thursday is likely to see aggressive bidding from wind power firms for the 1 gigawatt (GW) tender, according to companies and consultants.
ReNew Power Ventures Pvt. Ltd, one of India’s largest independent wind power producers, expects the bidding to be aggressive and competitive. “Most of the bids have come either for Tamil Nadu or Gujarat, which are high-wind states and therefore will give high PLF (plant load factor). Tariff will be a function of PLF and cost of equipment, but we expect bids to be aggressive and very competitive," said Ravi Seth, chief financial officer of ReNew Power Ventures.
As it is the SECI, an arm of the ministry of new and renewable energy, buying power, bidders will have greater assurance in terms of receivables being recovered, Seth added.
“I expect aggressive bidding in the auction and wind tariffs could be quoted at sub-Rs4 a unit in the SECI tender. The correction in capex will hopefully compensate for the expected IRR (internal rate of return) of the independent power producers," said Sandeep Upadhyay, managing director and chief executive at Centrum Infrastructure Advisory Ltd.
In a reverse auction, the bid is won by the entity quoting the lowest price.
In the SECI tender, bidders are allowed to locate projects in the state of their choice and most have opted for Tamil Nadu, followed by Gujarat.
Thursday’s bidding by wind projects will not see the level of aggression seen during the solar power auction in Rewa, according to Vinay Rustagi, managing director of Bridge to India, a consultancy.
Earlier this month, solar firms had quoted tariffs below Rs3 per unit to win contracts to develop the world’s largest solar power plant in Rewa, Madhya Pradesh.
Companies including ReGen Powertech, Mytrah Energy India, Ostro Energy Pvt. Ltd, Gamesa Renewable Pvt. Ltd, ReNew Power Ventures Pvt. Ltd, Inox Wind Ltd, Adani Green Energy Ltd, Hero Future Energies, and the EDF-SITAC venture are participating in the auction.
The SECI tender received 2.6 times the quantum of bids offered for the grid-linked capacity, Mint reported on 16 January. SECI received bids to the tune of 2.7 GW, showing high interest in the auction, according to a 4 February report by HDFC Securities.
“Wind is a very mature sector with a lot of sophisticated engineering and hardware, and has been in business for 30 years. So one knows the costs and has learned how to handle feed-in tariff mechanism and project IRRs. Unlike solar, wind sector has not seen massive cost reduction," said DV Giri, secretary general of Indian Wind Turbine Manufacturers Association. He expects tariffs in the reverse auction to not fall below Rs4-4.25 per unit.
Costs of solar modules have fallen by about 80% over the last five years while wind turbine generator costs have fallen about 20% over the same period.
India has set itself a target of achieving 100GW of solar energy and 60GW of wind capacity by 2022. The country currently has installed wind power capacity of a little less than 30GW.
Only eight states in India are suitable for wind power projects —Gujarat, Karnataka, Maharashtra, Andhra Pradesh, Tamil Nadu, Rajasthan, Madhya Pradesh and Telangana. Almost all of India’s 29 states are conducive for solar projects.