Solar power tariffs came down to roughly a third in the last five years thanks to price discovery through the competitive bidding route. Wind power prices, after remaining rather stable through these years, appears to be on the solar sector’s heels now. Buoyed by the Centre’s award of 1,000 mega watt (MW) wind projects through competitive bidding that reduced tariff by 19% from the bottom of the current feed-in-tariffs range, the Rajasthan government is set to invite bids for 500 MW wind power capacity in the next couple of months, a person close to the development told FE. The capacity could be used for sales to other states as well. The trend is likely to be followed by other states as well in the future. Industry watchers expects that states like Maharashtra, Gujarat and Madhya Pradesh might be the first lot to follow suit. Currently, wind power tariffs are determined by State Regulatory Commissions through the feed-in tariff method, where the state regulatory commission, in consultation with the other stakeholders, arrives at a tariff for one year. The Modi government is now looking at competitive bidding route to discover the market rates for wind power projects across various states.
The prevailing feed-in tariffs are in the range of R4.25-4.8/unit across various states in India; in the recently concluded competitive bidding conducted by the Centre in Tamil Nadu, tariffs dropped to R3.46/unit. In comparison, 25-year levelised tariffs for solar projects came down from Rs 12.2/unit in 2010 to Rs 3.3/unit (Rs 2.97 for the first year) in the case of Rewa solar park in Madhya Pradesh in February, 2017.
A senior Rajasthan Renewable Energy Corporation official told FE: “We have decided that we will invite tenders for the wind projects as against the feed-in tariffs mechanism.” “Besides, there are some 100 MW of wind power projects that are in various stages of commissioning in Rajasthan. We want to put these projects also under bidding route,” the official added. Companies had erected turbines in advance expecting feed-in tariffs. The state’s decision to adopt the bidding route could hurt the turbine manufacturers.
As a step to prepare themselves before awarding the inter-state or intra-state projects, states along with Power Grid Corporation of India are setting-up infrastructure to evacuate the wind and solar power generated within the states. “The country has the technical know-how, manufacturing base, generators, all we need is a strong policy towards acquisition of land for wind projects, and safer and faster evacuation of wind power across states, so that total generation from wind sector does not fall below the 5,525 MW achieved in FY17,” the official quoted above said.