India’s Gujarat Scraps 555 Megawatt Wind Capacity Allocation

The Indian state of Gujarat has once again scrapped renewable energy capacity allocation, citing high tariff rates.

The state-owned power distribution utility Gujarat Urja Vikas Nigam Limited (GUVNL) has announced that it will allocate just 190 megawatts of the 745 megawatts of wind energy capacity allocated in May. The company decided to allocate a limited capacity after most developers refused to match the lowest tariff bid.

GUVNL had offered a total capacity of 1 gigawatt of wind energy through the second such tender under state policy. However, the tender received poor response from project developers who submitted bids only for 931.40 megawatts. Gujarat has had a history of cancelling allocated capacities and tenders citing high tariff bids, which may have been a contributing factor for the poor response. Due to the undersubscription, GUVNL finally offered just 745 megawatts of capacity.

A total of eight developers submitted bids for the tender, including four mainstream developers. The largest bid was submitted by Adani Green Energy at 300 megawatts but was allocated just 113.6 megawatts due to exhaustion of offered capacity. The range of tariff bids was quite wide with the lowest bid at 4.01US¢/kWh and the highest being 4.21US¢/kWh.

GUVNL subsequently asked all developers to match the lowest tariff bids that was submitted by lesser-known developer Anisha Power Projects. Only two of the eight other project developers responded positively to this demand. 

GUVNL officials have now decided to allocate only 190 megawatts of capacity among three developers at a tariff of 4.01US¢/kWh. Some of the largest wind energy developers in the country refused to match the lowest tariff, including ReNew Power, Inox Wind, and Adani Green Energy. These three companies have been awarded 3.8 gigawatts of capacity in the 12 wind energy auctions held in India so far, accounting for more than a third of the awarded capacity.

The issue of high tariffs, and subsequent cancelled of capacity allocation, has been a hurdle to the expansion of renewable energy capacity in the state of Gujarat. Despite the 2.5-times oversubscription of a 700 megawatt solar power tender for the Raghanesda solar power park, the state government refused to sign power purchase agreements with SB Energy, Fortum Energy, and Engie citing high tariff rates.