Wind power sector hopes to see demand surge on low tariff

After recent auction, Centre looking to award projects for additional 4,000 Mw

The success of the country’s first-ever auction for wind power projects is likely to spur the demand for the alternative energy source.
 
With the tariff plunging to Rs 3.46 per unit in the auction held on Thursday, wind energy contrators are expecting more states to come forward to either award projects or buy cheaper wind power.
 
Officials in the ministry of new and renewable energy (MNRE), too, say the govenment is looking to award projects to generate 4000 Mw of additional wind power, through auction in two tranches.
 
“We are hopeful that this tender has garnered industry’s interest and has also spiked the interest of the states. The low price has made the wind (energy) alluring again for the states to buy and meet their renewable purchase obligation (RPO),” said a senior MNRE official.
 
An industry executive said the delivered cost of the power project would be about Rs 7 crore per Mw.
 
“The expectation for returns is lower as the execution period is 18 months in this tender. Also, the interest rates have softened and power purchase agreement is being signed upfront. This gives a developer a lot of room to innovate, lower his costs and get the most advanced technology,” Devansh Jain, wholetime director, Inox Wind Limited told, Business Standard.
 
Inox Wind is one of the five players that won wind power projects in the auction at the winning bid of Rs 3.46 per unit.
 
Bihar, Delhi, Odisha, Goa, and Dadra & Nagar Haveli are in advanced discussions for power procurement from the first wind power project auction. Indian Railways and Delhi Metro Rail Corporation have shown interest as well, said the MNRE official.
 
Besides, the industry is expecting states such as Rajasthan, Andhra Pradesh and Karnataka to come up with state-specific wind power project tenders.
 
“The size of the wind sector is set to increase more than ever. With two dozen states coming forward to buy wind power at Rs 3.46 per unit, there is obviously tremendous demand in the market. Subsequent tenders might see tariffs fluctuate in range of +/-25 per cent, but it would continue to be a cheaper and reliable option to meet RPO,” said Jain.
 
Mytrah Energy, Inox Wind, Ostro Kutch Wind won contracts for 250 Mw each and Green Infra (Sembcorp India) bid for 249 Mw. As the quota of 1000 Mw was being missed by just 1 Mw, the government allotted 50 Mw to Adani Green Energy, thereby overshooting its target. Adani also quoted the same lowest tariff as the other four.
 
The wind sector worked on the ‘feed-in-tariff’ (FiT) regime till yet, which meant the price of power would depend on the cost of the project. Industry executives said the FiT regime is witnessing its last days now.
 
“My guess is another six or eight months and FiT would cease to exist. State-specific projects would get windy states on board and the non-windy states are expected to procure more,” said Jain.
 
Inox would build 250 Mw – either in Gujarat or Tamil Nadu, where it has long-term transmission connectivity with the national grid, said Jain.
 
The responsibility of getting the inter-state transmission system connectivity and long-term access lies entirely with the wind project. The project site would be finalised by the Solar Energy Corporation of India, the designated agency for executing the wind project auction, and subsequently offered to the winning companies.
 
The Power Trading Corporation of India is the agency for purchase and sale of wind power after entering into a power purchase agreement for 25 years with the successful bidders.