Home / Industry / Energy /  Wind power tariffs may hit a new low of Rs3.30 per unit

New Delhi: Wind power tariffs are expected to fall to a record of around Rs3.30 per unit in a 1 gigawatt (GW) tender by state-run Solar Energy Corp. of India (SECI).

SECI has received bids for three times the grid-linked capacity on offer.

Wind power tariffs in India followed the solar route and hit a record low of Rs3.46 per kilowatt hour (kWh) in February during a 1GW tender by SECI. Solar power tariffs fell to Rs2.44 per unit at the auction of 500 megawatts (MW) of capacity at the Bhadla solar park in Rajasthan in May.

“We have received a phenomenal response for the 1,000MW ISTS (inter-state transmission system) wind tender. Once we resolve a few issues with CERC (Central Electricity Regulatory Commission) for better risk mitigation, we will conduct the auction," a SECI official said, requesting anonymity.

“This will help in discovery of a competitive tariff. The response has been better than last time," the official added.

Mint could not immediately reach out to the SECI spokesperson.

Mytrah Energy (India) Ltd, Singapore-based Sembcorp Industries Ltd, IDFC Alternatives-backed clean energy firm Green Infra Ltd, global private equity fund Actis Llp’s platform Ostro Kutch Wind Pvt. Ltd and Inox Wind Infrastructure Services Ltd bid Rs3.46 per kWh of wind energy to win contracts for 250MW each, Mint reported on 25 February.

Those qualifying for the technical bid stage will be eligible for the financial bid stage. Once the financial bids are opened, a reverse auction process will be run to select the developers. In a reverse auction, the developers are chosen on the basis of the lowest prices offered.

India has a target of installing 175,000MW of renewable energy by 2022. Of this, 100,000MW is to be generated by solar projects and 60,000MW by wind projects. The country had an installed wind capacity of 32,279.77MW as of 31 March.

The price gap between electricity generated from thermal, solar and wind projects has been narrowing. This is primarily due to costs of solar modules and wind turbine generators falling over the past five years.

On Wednesday, rating agency Icra Ltd said in a report that the “viability of the competitive bid-based tariffs for the winning developers in the wind and solar power sector would be critically dependent on capital cost, PLF (plant load factor), debt tenure and cost of funding".

“We really welcome the move that the prices are falling. But wind is a different ball game. We need to make sure that the long-term sustainability is maintained and manufacturing process stays in India," said Rakesh Kamal, a consultant with The Climate Reality Project, which works on climate change-related issues.

“Before reverse bidding in wind was adopted, a lot of components were manufactured in India. But with reverse bidding and companies racing to bag projects, the manufacturing in India may take a back seat. For cost optimization, the companies may now look outside India for cheaper components," Kamal added.

Apart from on-shore wind, the government is also exploring the potential of off-shore wind power. In September 2015, the central government had come out with a National Offshore Wind Energy Policy, aiming to harness wind power along India’s 7,600km coastline.

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