The trend of poor response from project developers to India’s wind and solar power projects continued as bids came in for the eighth national-level wind energy tender organized by the Solar Energy Corporation of India.
Media reports stated that the 1.8-gigawatt wind energy tender issued by SECI in June received only two bids with a total capacity of 550 megawatts. As a result, almost 1.25 gigawatts of wind energy capacity remained undersubscribed.
The two companies that placed bids in this tender are CLP India and a subsidiary of Enel Green Energy. CLP India submitted a bid for 250.8 megawatts, while Enel subsidiary proposed to set up 300 megawatts of capacity. Of the 12 state and federal-level wind energy auctions conducted so far in India, CLP India has not secured any capacity, while Enel Green Energy won 285 megawatts of capacity in the fourth SECI auction. The SECI is now expected to offer around 440 megawatts of capacity in the financial round.
The maximum threshold for tariff bids allowed in this tender has been set at Rs 2.85/kWh (3.98US¢/kWh). This limit is marginally higher than that set for the previous SECI tender. In the seventh auction, SECI had set the tariff bid limit as Rs 2.83/kWh (3.95US¢/kWh).
The seventh auction had seen a poor response from the developers as well. Of the 1.2 gigawatt capacity offered by the SECI, developers submitted bids for just 600 megawatts. Eventually, only 480 megawatts capacity was auctioned and allocated to four developers at the lowest bid of Rs 2.79/kWh (3.90US¢/kWh).
Unnamed sources within some wind energy developers have been quoted by some media reports blaming tariff thresholds as the main reason for the low participation by project developers. There have been other reasons as well which would definitely played a part in the decision-making process of the project developers. Lack of transmission network to evacuate energy, mounting unpaid dues by off-takers and attempts to renegotiate power purchase agreements by some states would surely have dented the spirits of the project developers.
Liquidity crunch in the broader Indian economy could be another major factor. Two major equipment manufacturing companies in the wind energy sector listed at Indian bourses have been reporting losses for at least the last two quarters. Further, blaming just the tariff threshold seems unreasonable. The lowest financial bids in the last six SECI auctions have been between Rs 2.44/kWh (3.41US¢/kWh) and Rs 2.82/kWh (3.94US¢/kWh) which are well within the limits set in the last two auctions.
In the last few weeks, the Indian government made amendments to the auction parameters to attract the project developers back. Whether these amendments make any difference or not would be known from the response of the project developers to the ninth SECI tender.
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