Competitive bidding raises hopes for wind sector

Sapna Gopal

The year 2017 witnessed the wind sector in India transit from Feed-in Tariffs (FiTs) to competitive bidding (reverse auctions), a move that many industry insiders believe, led to its slowdown. Since the introduction of e-Reverse Auction in 2017, the wind sector has only been able to achieve 1.7 GW per annum. With tariffs that are not viable, many original equipment manufacturers chose to export the turbines and components instead of catering to a low volume and a low tariff domestic market, experts lamented.

However, things may soon improve for the sector as in January this year, the Ministry of New and Renewable Energy (MNRE) revised the auction process for wind energy projects to move from reverse auctions to closed bidding. Some of the main features of the new competitive bidding mechanism are:

Bids for a cumulative capacity of ab­out 8 GW will be issued each year from January 1, 2023 onwards, up to 2030.

To ensure that wind energy capacity is developed in all the eight windy states, (Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Telangana), every bid will be a composite one, consisting of state-specific sub-bids for each of the eight windy states. The pow­er generated from the capacity established via each of the state sub-bids will be pooled and offered at a pooled tariff to all procurers. The pooling will be as per the Electricity (Amendment) Rules, 2022.

The bids will be on a single-stage two-envelope closed-bid basis. One envelope will contain the technical bid and the other will contain the financial bid. The envelope containing the technical bid will be opened first and the financial bids of only those bidders who qualify in the technical bid will be opened.

The bids will specify the capacity to be installed. Each sub-bid will be specific to one state. The cumulative size cap for any one of the eight states in one year will not be more than 2 GW every year. The Solar Energy Corporation of India (SECI) or im­plementing agencies may determine the minimum and maximum bid size, based on the wind Renewable Purchase Obligation targets of the states.

The Solar Energy Corporation of India (SECI) will issue bids with a cumulative capacity of about 8 GW every calendar year from 2023 up to 2030. A detailed break-up of this capacity shall be issued by SECI.

Necessary amendments in the guidelines for tariff-based competitive bidding process for procurement of power from grid-connected wind power projects for this purpose will be notified separately.

Welcome move, say experts

Industry insiders believe that certainty of 8GW per annum up to 2030 is a very sensible and concrete decision.  "This will help original equipment manufacturers to plan their production, bidders to work on various sites and funding from bankers with payment security mechanism from SECI", a leading wind energy veteran told this reporter.

It has been decided that to ensure wind energy capacity comes up in all the 8 windy states, every bid will be a composite bid-comprising of state specific sub-bids for each of the 8 windy states. The power generated from capacity established in each of the state sub-bids will be pooled and offered at pooled tariff to all procurers. Hailing this decision, the veteran added, “This is what the industry has been asking from the government.  Now, wind development will happen in at least 6 to 7 states instead of its earlier restriction to Gujarat and Tamil Nadu with e-Reverse Auction.”

Closed bidding, all inclusive development in wind states, he added, is a welcome move and certainly better than e-Reverse Auction.  "However, we have to wait and watch how this will play out. One area which has been left out is the investment opportunity for Micro Small and Medium Enterprises (MSMEs) who cannot take part in state auction at 25 MW and Central auction at 50 MW.  A special dispensation would be required for the MSMEs by special dispensation of a tariff over bided tariff Interest subvention to reduce the cost of funding.

The industry expects certainty of volume and continuous bidding that will help the entire eco-system to align itself to look at big numbers of say not less than 5 to 6 GW per annum beginning 2025, he concluded.