Wind power tar­iffs hit a new low of Rs2.64 a unit

All nine firms in lat­est auc­tion con­ducted by state-run SECI for 1 GW of power con­tracts bid be­low ear­lier record of Rs3.46

Mint Asia ST - - News - BUY TPAL B HASKAR

In­dia’s wind power tar­iff fell to a record low of Rs2.64 per unit in an auc­tion con­ducted by state-run So­lar En­ergy Corp. of In­dia (SECI) for 1 gi­gawatt (GW) of wind power con­tracts that ended on Thurs­day, 5 Oc­to­ber.

While Re­new Power Ven­tures Pvt. Ltd and Or­ange Sironj Wind Power Pvt. Ltd bid Rs2.64 per kilo­watt hour (kwh) to win con­tracts for 250 megawatts (MW) and 200MW each, Inox Wind In­fra­struc­ture Ser­vices Ltd and Sin­ga­pore-based Sem­b­corp In­dus­tries Ltd’s Green In­fra Wind En­ergy Ltd bid a tar­iff of Rs2.65 per unit for se­cur­ing con­tracts of 250MW each.

Adani Green En­ergy (MP) Ltd also bid Rs2.65 per unit to win a 50MW con­tract.

“Against the 1,000MW ca­pac­ity SECI re­ceived 12... bids to­talling 2,892MW ca­pac­ity, of which nine bids with a cu­mu­la­tive ca­pac­ity of 2,142MW were short­listed for e-re­verse auc­tion,” the govern­ment said in a state­ment.

Th­ese firms quoted the price at which they will sell elec­tric­ity to win con­tracts un­der the ten­der that re­ceived de­mand for three times the grid-linked ca­pac­ity be­ing sold.

Th­ese 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.

This is pri­mar­ily due to costs of so­lar mod- ules and wind tur­bine gen­er­a­tors fall­ing by 80% and 20%, re­spec­tively, over the past five years.

Ex­perts be­lieve that such tar­iffs couldn’t have been ex­pected ear­lier.

“Th­ese are un­be­liev­able prices. One would have never imag­ined th­ese kind of mar­gins ex­isted for the in­dus­try,” said Anish De, part­ner at the in­fra­struc­ture and govern­ment prac­tice at KPMG.

All the nine firms in the fray for the re­verse auc­tion bid be­low the ear­lier recorded low of Rs3.46 per kwh for an­other 1GW ten­der in Fe­bru­ary floated by SECI. In a re­verse auc­tion, de­vel­op­ers are cho­sen on the ba­sis of the low­est prices of­fered.

The ag­gres­sive bids came in the back­drop of In­dia’s wind sec­tor tran­si­tion­ing from a feed-in tar­iff regime to tar­iff-based com­pet­i­tive auc­tions. Feed-in tar­iffs en­sure a fixed price for wind power pro­duc­ers.

The win­ning prices are not an out­lier, as was ev­i­dent by the bids placed by BLP En­ergy Pvt. Ltd, global pri­vate eq­uity fund Ac­tis LLP’S Sprng En­ergy Pvt. Ltd, Hero Wind En­ergy Pvt. Ltd and Re­gen Pow­ertech Pvt. Ltd, which also bid low tar­iffs.

In such a sce­nario, ob­tain­ing fi­nance at the low­est cost has be­come key. In­dia has also wit­nessed record low so­lar tar­iffs of Rs2.44 per unit in May which firmed up to Rs2.65per kwh in an auc­tion con­ducted by the Gu­jarat govern­ment last month.

While a Sem­b­corp spokesper­son in an emailed re­sponse said, “Sem­b­corp Green In­fra Ltd has par­tic­i­pated in the sec­ond wind auc­tion and has emerged as one of the suc­cess­ful bid­ders,” queries send to the spokesper­sons of a Re­new Power, Adani Group and Inox Group on Thurs­day, 5 Oc­to­ber, re­mained unan­swered.

In­dia has a tar­get of in­stalling 175,000MW of re­new­able en­ergy gen­er­a­tion ca­pac­ity by 2022. Of this, 100,000MW is to be gen­er­ated from so­lar projects and 60,000MW from wind projects.

BLOOMBERG

Tran­si­tion phase: The bids came in the back­drop of the wind sec­tor tran­si­tion­ing from a feed-in tar­iff regime to tar­iff-based com­pet­i­tive auc­tions. Feed-in tar­iffs en­sure a fixed price for pro­duc­ers.

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