Wind association asks players not to bid too low

As India holds its first-ever competitive auction for wind power, the Indian Wind Turbine Manufacturers Association (IWTMA) has asked the prospective bidders to “bid in prudent manner” and not below the existing rates.

The auction started on Thursday with bids spiralling down to Rs 3.66 per unit, when the copy went to print. 

The association, in a letter, also suggested that bids should not be lower than the current feed-in-tariff (FiT) rates in various states. The average FiT across India is close to Rs 5 per unit for wind power projects.

“We understand that we all are very excited about the stated bid. However, considering that wind energy being a mature RE player, it is important to bid in a prudent manner, and take cue for the aggressive nature of recently held solar bids,” said IWTMA in the letter, also seen by Business Standard.

The letter, dated 23 February, is addressed to the prospective bidders for the 1000 MW wind power project tender floated by Solar Energy Corporation of India (SECI). 

Some of the leading companies in the sector — Mytrah Energy, Inox Wind, Semcorp, ReNew Power, Gamesa India etc — are participating in the bidding.

“One of the worries we feel is that if the bid goes below the current available FIT in various states (viz., Gujarat, MP, Karnataka & Tamil Nadu), there is a great possibility of shaking of the FiT market existing in such states, which would mean a reduced volume for FY18,” the letter said.

The IWTMA confirmed about writing the letter to the bidders. The letter came weeks after winning bids going as low as Rs 2.97 a unit (kilowatt per hour) during the auction for Rewa Solar Park (750 Mw) in Madhya Pradesh earlier this month.

The IWTMA has cited the impending goods and services tax (GST) and expiring tax benefits as the reasons to prevent the bids going ultra low. 

“There seems to be a big risk on the GST front, and various estimates can put this anywhere between 5 per cent to 12 per cent... If GST is pegged at 12 per cent, then the project cost can increase anywhere between Rs 15-25 lakh per MW,” it said.

Till April 2012, the wind sector enjoyed two fiscal benefits accelerated depreciation (AD) and generation based incentives (GBI). AD was in force for the wind industry between 2003 and 2012, when it was withdrawn.