It is envisaged that carbon-free sources will account for nearly 70 per cent of India’s aggregate power generation capacity by FY32, according to information released in Parliament.
India has pledged to have 100 GW of grid-connected solar power capacity by December 31, 2022. Out of this, 60 GW is to come from ground-mounted solar plants while 40 GW is envisaged to come from rooftop solar (RTS). According to reliable estimates, India’s total solar capacity stood at 33.8 GW as of September 30, 2019. The worrisome issue is that the performance of RTS is belying even the most conservative expectations. The total quantum of RTS installations is today barely 4 GW, which is just about 10 per cent of the 2022-target.
The Union power minister has reportedly cautioned seven states—Karnataka, Maharashtra, Andhra Pradesh, Telangana, Madhya Pradesh, Rajasthan and Tamil Nadu—that renewable energy developers could drag discoms of these states to the National Company Law Tribunal (NCLT) over the non-payment of dues. It is learnt that these seven states together owe around Rs.5,300 crore to RE developers, and that the total outstanding of RE developers, pan India, is around Rs.8,200 crore.
India’s solar sector is riding on a wave of optimism. The auction mechanism is working and tariffs are getting more and more competitive. The much talked about “grid parity” has since long been realized. Even tariffs of less than Rs.2.50 per kwh no longer raise eyebrows. Though India currently has around 16 GW of grid-connected capacity, which is far less than the targeted 100 GW by 2022, there is a plan in place that gives a feeling that we are indeed working towards a goal and not merely wishing things to happen. In the next two years, the plant to auction as much as 80 GW has been formulated and government appears resolute in its implementation plan.
The introduction of tariff-based bidding appears to have vivified the wind energy sector that was getting much lesser attention than solar in recent years. With two successful auctions by Solar Energy Corporation of India, the government is now confident that SECI auctions will help take the country realize its wind capacity targets.
In a very recent development, the Centre has announced its plans to conduct auction of a total of 20 GW of wind energy capacity, equally spread over two years, FY19 and FY20. Combined with an estimated 8 GW of auctions during the current year (FY18), these auctions will help attain the targeted wind energy capacity of 60 GW by 2022.
Nodal agency Solar Energy Corporation of India (SECI) has initiated its third wind energy auction. The scheme expects to set up capacity worth 2,000 mw through wind projects connected through the interstate transmission system (ISTS). This will help non-windy states honour their non-solar renewable purchase obligation (RPO). According to the tender documents, each participant will be allowed to bid for a minimum of 50 mw and a maximum of 400 mw. The developer will set up its wind project on BOO (build, own and operate) basis without any financial assistance from the Centre. The power purchase agreement will be entered with power distribution companies, for a duration of 25 years.
A total of 5 GW of wind capacity has been auctioned during the current fiscal year so far. In all, 8 GW is likely to be auctioned this year, followed by 10 GW each in the next two fiscals.
In the first auction conducted by SECI in FY17, PPAs for 1,000 mw of capacity were signed for a tariff of Rs.3.46 per kwh. The second auction, concluded in October this year, saw tariffs fall to a further 2.64 per kwh. In this auction, developers setting up plants in Gujarat, Tamil Nadu and Madhya Pradesh will be selling wind energy to non-windy states like Uttar Pradesh, Bihar, Jharkhand, Assam, Punjab, Goa and Odisha. The total capacity envisaged in the second auction was 1,000 mw.
The winners of the second auction include Renew Power (250 mw at Rs.2.64 per kwh), Orange (200 mw at Rs.2.64 per kwh), Inox (250 mw at Rs.2.65 per kwh), Green Infra (250 mw at Rs.2.65 per kwh) and Adani Green (50 mw at Rs.2.65 per kwh).
Including the third auction of SECI, a total of 5 GW has been auctioned in FY18 so far. Another 1.5-2.0 GW is expected to be auctioned in January 2018 followed by 1.5-2.0 GW. This makes a total of at least 8 GW of wind energy auctions in FY18. As discussed earlier, 20 GW of auctions will be held in FY19 and FY20, making a total of 28 GW.
India’s current wind energy capacity stands at 32 GW. With 28 GW of auctions to be conducted by March 2020, and allowing two years for commissioning, India appears to be on track to have 60 GW of wind energy capacity by 2022.
The official target for renewable energy is 175 GW by 2020, out of which 100 GW will come from solar, 60 GW from wind and 15 GW from other sources like small hydropower, biomass, waste-to-energy, etc. The government is confident of surpassing the 175-GW renewable energy target by at least 10 GW that will come from non-traditional sources like floating solar power plants over dams, offshore wind energy systems and hybrid wind-solar projects. Studies have been initiated to explore the possibility of installing floating solar power plants on the Bhakra Nangal dam in Himachal Pradesh. Coastal sites in Gujarat and Tamil Nadu are also being investigated for offshore wind power projects.
(This article’s author, Venugopal Pillai, is Editor, T&D India. Views expressed here are personal. The author may be contacted on venugopal.pillai@tndindia.com)
Also See: Tariff-based bidding a game changer for the wind industry
Competitive bidding in the renewable energy space has never failed to surprise. Solar tariffs had their share of excitement with falling tariffs, and now it is the turn of wind energy. The very recent wind energy auction by SECI, its second, saw tariffs of Rs.2.64 per kwh, much lower than the Rs.3.46 per kwh seen in the first auction in February 2017, which by itself was an incredulous figure.
There are reports that NLC India (formerly Neyveli Lignite Corporation) encountered similarly surprisingly low quotes for its solar energy cum battery storage projects. Mahindra Susten (the renewable energy arm of Mahindra & Mahindra Group) has emerged the L1 bidder with a quote of Rs.298.8 crore for a 20-mw solar power project equipped with a battery storage system. NLC India was expecting quotes upward of Rs.500 crore and there were five bidders (including Adani Group, Sterling and Wilson, etc) that quoted below this benchmark figure.
Tariff-based bidding in the wind energy sector is expected to pick up momentum in the coming months with both the Centre and states lining up major auctions.
The competitive tariff-based bidding mechanism in the wind industry, which was initiated earlier this year, is set to gain momentum. Tamil Nadu has become the first state to procure wind power using the reverse bidding process. The southern state is seeking long-term purchase of 500 mw, at a tariff not exceeding Rs.3.46 per kwh. Bidders can set up wind power projects of at least 25 mw in Tamil Nadu and the procurement agency Tamil Nadu Generation & Distribution Corporation Ltd (Tangedco) will select the bidders based on the lowest tariff quoted. It may be mentioned that Tamil Nadu needs to procure 500 mw of wind energy to part-fulfil its RPO target of 9 per cent for FY18.
Tamil Nadu will thus be sourcing wind power at a competitive rate of Rs.3.46 per kwh, or lower. This would be much below the feed-in tariffs for wind that have traditionally been in the range of Rs.4 to Rs.6 per kwh. Tariff-based bidding is thus expected to create of war of tariffs in the wind industry as much as it did to the solar industry.
It may be recalled that in February this year, nodal agency Solar Energy Corporation of India (SECI) opened bids for 1 GW of wind power, heralding the tariff-based competitive bidding route for wind energy in India. Mytrah Energy, Green Infra Wind Energy, Inox Wind, Ostro Kutch Wind and Adani Green Energy emerged as the lowest bidders quoting Rs.3.46 per kwh. It may be noted that Tamil Nadu has used the same Rs.3.46 per kwh as the benchmark. SECI is also scheduled to procure another 1 GW of wind energy through the tariff-based bidding route and one can expect rates to be even more aggressive. The basic idea of such auctions is to help non-windy states meet their RPOs by procuring wind energy generated in windy states and transmitted through the ISTS (interstate transmission system).
While Tamil Nadu is already in the market with its 500-mw procurement, states like Gujarat, Rajasthan and Madhya Pradesh are believed to be lining up similar auctions. Though the quantum of their power purchase is yet unknown, these three states are expected to collectively mop up upwards of 1 GW from their auctions. Incidentally, Tamil Nadu is scheduled to open the techno-commercial bids for its 500-mw procurement drive on July 18, 2017.
India has set a renewable energy target of 175 GW by 2022 and wind accounts for 60 GW. As of March 2017, India’s wind energy capacity stood at around 32 GW with Tamil Nadu leading with a 27 per cent share, followed by Maharashtra, Gujarat and Rajasthan, each with a share of roughly 15 per cent. In the next five years, India needs to double its wind power installed capacity base and tariff-based auctions could help set up large-scale capacity, coupled with aggressive tariffs.
Also Read:
In early 2011, it became mandatory for all power procurement to be made through the tariff-based competitive bidding (TBCB) mechanism. The TBCB philosophy ensures that the procurer of power gets the best possible tariff. There is no distinction between public or private sector suppliers of power. While much efficiency has been achieved through the TBCB modality in conventional power, the positive impact of TBCB is now being felt in the renewable sector as well.
