Struggling to attract sufficient bids for its wind energy tenders, India has decided to increase the maximum tariff bid by 2.8% for its latest national-level tender.
The Solar Energy Corporation of India recent issued key amendments to the ninth national wind energy tender. SECI had issued the tender in September offering 1.8 gigawatts of capacity. The maximum bid allowed under the initial terms was Rs 2.85/kWh (4.02US¢/kWh), which has now been increased to Rs 2.93/kWh (4.13US¢/kWh).
In the eighth tender, SECI had offered 1.8 gigawatts of capacity but managed to attract bids for only 550 megawatts. Eventually, only 440 megawatts of capacity was allocated among two developers. The seventh edition saw SECI offer 1.2 gigawatts of capacity and developers submitted bids for just 600 megawatts. Only 480 megawatts of capacity was finally allocated in the tender.
Issues related to land acquisition, adequate transmission infrastructure, and timely payments seem to have emerged as major challenges for project developers over recent months. Several states have threatened to cancel or renegotiate power purchase agreements with renewable energy generators. More than a billion dollars of unpaid dues to the generators has limited developers’ ability to afford new investments.
It therefore comes as no surprise that the government has been forced to amend the terms of existing tenders. To make the tenders attractive, the Ministry of New and Renewable Energy recently issued revised guidelines for wind energy tenders. The revised guidelines offered reduced penalty for generation shortfall, increased tariff for generation resulting from early commissioning, and more time to commission projects.
Over the last year, the lowest wind energy tariff in SECI auctions has increased by 2.5%. In September 2018, the agency managed to auction the full 1.2 gigawatt offered capacity with the lowest tariff bids of Rs 2.76/kWh. The third edition auction, held in February 2018, holds the record for India’s lowest-ever wind energy tariff bid. A total of 2 gigawatts of capacity was auctioned at the lowest tariff bid of Rs 2.44/kWh.