Within 10 months of introducing competitive auctions in the wind energy sector, India has witnessed a sharp correction in tariff bids by project developers. The major reason for this sharp correction is the virtual ban on allocation of wind energy projects under the feed-in tariff regime.
India held its first-ever national level wind energy auction in February 2017. The Solar Energy Corporation of India (SECI) offered 1,000 megawatts of wind energy capacity, and 1,050 megawatts of capacity was allocated to five developers at a minimum tariff of Rs 3.46/kWh (5.2¢/kWh). The lowest tariff offered under the feed-in tariff regime was Rs 4.16/kWh (6.2¢/kWh) in Tamil Nadu, although Rs 3.82/kWh (5.7¢/kWh) is also offered in the state of Maharashtra at sites with low wind speeds.
The first-ever state level auction was organized by the utility of the state of Tamil Nadu which allocated 450 megawatts of capacity at a tariff of Rs 3.42/kWh (5.4¢/kWh). The state is host to the largest capacity of wind energy capacity in India.
SECI again tendered 1,000 megawatts of capacity in October and once again allocated 1,050 megawatts of capacity among five developers at a tariff of Rs 2.64/kWh (4.1¢/kWh). These will be the first wind energy projects in India with a tariff of less than Rs 3.00/kWh (4.7¢/kWh).
The state of Gujarat organized its first-ever wind energy tender in December 2017 after some legal delays and allocated 407 megawatts of capacity at a tariff of Rs 2.43/kWh (3.8¢/kWh). The tariff is not only the lowest-ever wind energy tariff, but also the lowest tariff for any renewable energy project.
Over a period of 10 months, wind energy tariff bids in India fell 30%. State governments no longer sign power purchase agreements with wind energy projects under the feed-in tariff regime. Project developers have no option but to participate in auctions to set up wind energy projects and hence are willing to bid at such competitive rates.
Tariffs are expected to remain competitive as India’s central government, through SECI, plans to auction 10 gigawatts of wind energy capacity each in FY2018-19 and FY2019-20.