Hybrid renewable tariffs likely to continue at premium, says Ind-Ra

The upcoming wind-solar hybrid auctions will spark cautious optimism among independent power producers, India Ratings and Research (Ind-Ra) said on Monday.

The Ministry of New and Renewable Energy issued tariff-based competitive bidding guidelines for power procurement from grid-connected solar-wind hybrid projects during October 2020.

The move is aimed at promoting large grid-connected wind-solar hybrid systems for optimal and efficient utilisation of transmission infrastructure and land, and thus reduce the variability in renewable power generation and achieve better grid stability.

However, said Ind-Ra, technical complexities related to grid integration and inclusion of floor capacity proportion of wind projects (at least 33 per cent of the total contracted capacity) in hybrid mix could weigh on project economics and tariff assumptions.

This is despite the competitive bidding guidelines addressing many of the issues hampering the growth of hybrid projects in the past, it added.

On the contrary, standalone renewable auctions (especially solar) are likely to garner higher interest on account of developing comfort around photovoltaic technology, improving in panel efficiency, lower volatility in generation, increasing economies of scale and decreasing operating costs.

Ind-Ra said there are a limited number of independent power producers with equal capabilities to execute both solar and wind projects on this scale, which reduces competition.

If located in the most resource-rich areas, hybrid projects at the tariffs discovered so far are likely to provide better returns than standalone solar and wind, making a good case for investments in them compared to commoditised standalone solar and wind projects.

Round-the-clock renewable power will be vital if the country has to increase its dependence on renewables and meet the ambitious target of achieving 450GW of renewable energy by 2030.

Hybrid power, whether a combination of just renewables or an optimal combination of renewables backed by conventional power, is surely a step in the right direction, said Ind-Ra.

While the initial response to hybrid power auctions had been muted, Ind-Ra expects the interest to pick-up as more developers become comfortable with both solar and wind.