Amendments approved to bidding guidelines positive for wind power developers: Icra

The recent amendments approved to bidding guidelines are positive for wind power developers and will boost wind capacity addition in this financial year, a report on Friday said.

The government on Wednesday made certain amendments to the bidding guidelines for wind projects to fast-track installation of such energy projects.

The amendments approved to bidding guidelines are positive for wind power developers, as a result wind capacity addition will augment in FY2019-20, Icra said in statement.

Icra further said, it expects wind power capacity addition to increase to about 3.5-4.0 GW in FY2020, supported by the large project awards by the nodal agencies and measures being taken to address some of the key challenges.

Moreover, this move is positive for wind power developers who are experiencing significant delays in project execution due to issues like delays in land acquisition and securing transmission connectivity.

As per the new guidelines, now the timeline for land acquisition for wind power projects has been extended from seven months to scheduled commissioning date i.e. 18 months.

"This augers well for the developers, given the large delays witnessed in completing land acquisition in many of the recently awarded projects," Sabyasachi Majumdar, Group Head - Corporate ratings, ICRA said.

Majumdar further said, amendments such as providing additional time for revising annual capacity utilisation factor (CUF), lowering the penalty rate for shortfall in generation to 50 per cent of the quoted tariff from 75 per cent of the quoted tariff and allowing sale of power from part commissioned capacity at quoted tariff against 75 per cent of the quoted tariff earlier are also positive for the developers.

According to Icra, the amendments were in view of the significant delays seen in recent past in the execution of projects due to land acquisition issues.

As against more than 12 GW capacity awarded over the past 2.5 years, the actual execution on the ground has been slow with only 2.3 GW commissioned between April 2018 to June 2019, it noted.

Icra however noted that "the sector continues to face challenges related to weak counter-party credit profile reflected from deteriorating receivable position in a few states, viability of the bid tariffs at less than Rs 3 per unit and securing financing in a timely manner for under-construction projects.