India To Auction 4.5 Gigawatts Of Wind Power Projects By February 2018

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Sticking to its announced road map to expedite wind energy auctions, India will put 4.5 gigawatts of capacity on the block by February 2018.

The Ministry of New and Renewable Energy has announced that auctions of 1.5 gigawatts of capacity each will take place in October, December 2017 and February 2018. So far two auctions have been organized at the central level with 1 gigawatt capacity each.

Both the auctions have yielded record low tariffs. The first auction saw allocation of 1,050 megawatts capacity at the lowest tariff of 3.46/kWh (5.3¢/kWh) while in the second, 1,000 megawatts was allocated at the lowest tariff of 2.64/kWh (4.0¢/kWh). The latest tariff is cheaper than not only almost all thermal power plants but also almost all solar power plants in India.

These are the first auctions in India’s wind energy market. Buoyed by the success and competition among developers, several state governments have also initiated auctions while moving away from the feed-in tariff regime.

India has set a target for 60 gigawatts of operational wind energy capacity by March 2022 while the current operational capacity stands at around 38 gigawatts. In all likelihood the country would exceed this target. The central government has announced plans to auction 4-5 gigawatts every year while state governments will host separate auctions.

While highly beneficial to the government and power utilities, these auctions may pose financial threats to the bidders. Tariff bids have collapsed 24% in a matter of few months, highlighting the desperation among the project developers and turbine manufacturers. This increased competition is the direct result of states moving away from feed-in tariff regime to reverse auctions.

Recently completed projects under the feed-in tariff regime remain stranded, unable to inject power into the grid as power utilities have refused to procure this relatively costly power.


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