The tenders introduced by SECI last year have secured just 600MW's worth of bids amid declining wind capacity additions across India
The Solar Energy Corporation of India (SECI) last year released tenders for 1.225GW comprising 200MW in Karnataka, 750MW in Andhra Pradesh and 275MW in Uttar Pradesh.
The global response to the tenders since that time has been underwhelming, however, with just 600MW’s worth of bids being attracted since January 2018, highlighting the price sensitivity of developers, according to GlobalData’s Harminder Singh.
The market intelligence firm’s director of power said: “The tender has seen bids from only four players, for a total of 600 MW of capacity, which is half of the total capacity on offer.
“The maximum tariff payable to each wind project developer was fixed at INR 2.83/kWh for the entire term of 25 years.
“This is very slightly lower than INR 2.85/kWh fixed in the previous auction, Tranche VI, which was oversubscribed significantly with 2,325MW of bids submitted for allocation of 1,200MW capacity.
“The lowest tariff witnessed in this auction was INR 2.82. The significant difference in the responses to two tenders within a period of two months shows the high price sensitivity of wind project developers.”
The SECI tenders
In Andhra Pradesh, the 750MW solar projects will be distributed across three 250MW projects at the Kadapa Solar Park, located near the Galiveedu Mandal of the Kadapa District.
Each of the 250MW projects will be further divided into five sub-projects of 50MW each, while the 200MW project in Karnataka will include four sub-projects of 50MW each.
The plants will be located in the Pavagada Solar Park, in Pavagada town in Tumkur District in Karnataka.
The 275MW project in Uttar Pradesh is intended to power 100% of Varanasi with renewable energy.
These grid-connected solar plants will be installed under the National Solar Mission Phase-II, Batch-IV, Tranche XIII.
The project will include six different plants and will be located in Kanpur Dehat and Jalaun districts in the state.
Kanpur Dehat will be home to Gujrai project with capacity of 50MW, while the remaining five projects, including Parasan with 75MW capacity, Gurhah with 75MW, Banghauli with 20MW, Makreccha with 25MW and Tikar (I&II) with 30MW will be located in Jalaun district.
SECI is expected to sign 25-year power purchase agreements with selected bidders and the power generated from the plants will be sold to the respective electric utilities in the states.
“Wind capacity addition has been declining in India, with the capacity addition in 2018 estimated at just above 1,600MW and for 2017 at around 1,766MW,” added Mr Singh.
“Compared to this, the capacity addition saw a record high of 5,500MW in 2016.
“While auctions have been successful in bringing down the tariffs, this may not hold well in future, since the costs are not expected to decline fast enough for wind as compared with its counterpart solar.
“Furthermore, land acquisition and financing issues continue to trouble the developers and the limited availability of good wind sites will mean that as developers move to medium or low wind sites, they will require higher tariffs to maintain the viability of projects.
“It will be interesting to see what lessons will be learnt from this auction and how SECI will respond in its forthcoming wind auctions.”