1. In a first, Narendra Modi govt gives 600 MW stranded power projects second wind

In a first, Narendra Modi govt gives 600 MW stranded power projects second wind

A clutch of wind power units with a combined capacity of 600 MW that has never been put to use for the want of long-term buyers have been offered a ray of hope by the government, by allowing them to participate in the first ever auction for wind...

By: | New Delhi | Published: October 13, 2016 6:27 AM
These wind power units in crisis had come up on promises by some states that the power would be purchased by them on a long-term (20-25 years) basis. But that was not to be and investments of R4,000 crore are on the verge of being declared non-performing assets. (Representative image) These wind power units in crisis had come up on promises by some states that the power would be purchased by them on a long-term (20-25 years) basis. But that was not to be and investments of R4,000 crore are on the verge of being declared non-performing assets. (Representative image)

A clutch of wind power units with a combined capacity of 600 MW that has never been put to use for the want of long-term buyers have been offered a ray of hope by the government, by allowing them to participate in the first ever auction for wind power. As the government is set to invite tenders for 1 gigawatt (GW) of wind power in order to help states without natural wind advantage meet non-solar renewable purchase obligation, along with the potential investors, these existing units can also bid. This is a break from convention as usually auction for long-term power purchase agreements — which has so far happened only in the thermal power sector — is confined to new players, not existing ones.

These wind power units in crisis had come up on promises by some states that the power would be purchased by them on a long-term (20-25 years) basis. But that was not to be and investments of R4,000 crore are on the verge of being declared non-performing assets.

According to sources, these existing projects without PPAs along with new ones in eight states in southern and western India would sell power to the ones in the north and east.

The reverse e-auction would be conducted by the government-owned Solar Energy Corporation of India (SECI). PTC India will buy power from the developers and sell it to northern and eastern states. The onus of signing PPAs would lie with PTC India, thus mitigating developers’ risk. However, wind turbine manufacturers and developers have still expressed concerns regarding the interstate transmission issues, especially in the west-north corridor.

Government sources, however, said that the concern on the transmission congestion front is exaggerated as the only corridor currently facing issues is the western-northern line. With two Power Grid projects that are currently under way, congestion should cease to be factor by early next years, they said. Many states including Gujarat, Rajasthan, Maharashtra and Tamil Nadu have reached the threshold of wind capacity they can locally use. This has led to these states asking wind developers to back down on generation and have also capped PPAs. With the new auction policy, stranded and new projects would become viable as power could be sold outside the respective states.

“The auction process for 1,000 MW of wind power capacity provides us additional business but the government needs to take precaution against aggressive behaviour by developers and cap the capacity that one can bid for,” Sarvesh Kumar, chairman, Indian Wind Turbine Manufacturer’s Association, told FE.

Although the solar power sector has attracted more attention in the last two years thanks to the ambitious capex plans laid out by the Modi government, it is the wind energy industry that is the cornerstone of domestic renewable energy in the country. India ranks fourth in the world with nearly 28 GW of installed wind capacity. Despite its long history, wind power has never been procured under the bidding process. Wind equipment manufacturers have thrived on generous feed-in tariff offered by states to become net exporter of wind turbines.

“The feed-in tariff regime has outlived its utility but since it’s the first instance of auction-based procurement, the developers are grappling with uncertainty,” Sunil Jain, CFO, Hero Future Energy, told FE. He cited transmission constraints and unavailability of areas rich in wind potential — due to existing players squatting on the land acquired for over a decade — as reasons for the below-potential expansion of the sector.

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