The central government is also looking at pooling the tariffs for wind energy across states
The Centre is considering scrapping the reverse auction procedure for bidding on wind and solar projects.
Union minister for new and renewable energy Raj Kumar Singh said the wind energy industry has asked the government to revert to closed bids on the grounds that reverse auctions hurt businesses due to low tariffs discovered through the process.
In a reverse auction, once the lowest bid is found after the bids are opened, there is a further auction for even lower bids. In renewable energy, the mechanism of reverse auctions has been used largely to discover the lowest tariff.
The minister said that although reverse bids lead to lower prices, the need of the hour is also to install capacities. The auction process should not impact the capacity building process.
“The jury is out on that as to (whether) reverse bid should be there or not. Because reverse bid will lead to lower prices. But I also want capacity. It should not be a case that the bids are done and are not installed,” Singh said in an interview.
Noting that the wind power sector has not progressed as desired, Singh, who also holds the power portfolio, said that the industry is of the view that although there are eight windy states in the country, due to open bids followed by reverse auction, the tariffs arrived at are low, prompting businesses to head for the windiest state, Gujarat.
He also said that the government is now looking at pooling the tariffs for wind energy across states.
“The speed of wind will be different in Madhya Pradesh, Andhra Pradesh, Karnataka, Gujarat, so the rates of electricity will also be different. They will depend on the wind speed. So, how does SECI (Solar Energy Corporation of India) sell it to the discoms? So, we have decided to come out with a rule for pooling, bundling. All tariffs will be bundled together and then offered. It will be a rolling sort of thing. It will be for every five years. If we start this today, we will continue for five years. So, all the bids which will be done by SECI; it will be a rolling sort of an average,” he said.
Under the pooling procedure, a tender, say for 3,600 MW, would comprise six bids of 600 MW each in six different states. Singh said the type of bidding procedure—closed, open or reverse auction—is being discussed.
He said the wind power industry does not want reverse auctions and has sought for the process of closed bids.
“We will do the same in solar. Right now, what is happening is that I buy solar today at ₹2.60 (per unit of power). Tomorrow some rate comes at ₹2.40,” the minister said.
The consideration to change bidding procedures comes on the back of the government’s target to achieve 500 GW of renewable energy by 2030. As of 29 September, the total installed renewable energy capacity was around 163 GW.
India has an installed capacity of wind and solar energy of 41.205 GW and 59.303 GW respectively, according to data from the power ministry.
So far, India only has onshore wind capacity, which has got the government pushing offshore wind projects. On 5 October, Mint reported that the government is considering leasing out its ocean floors for offshore wind energy projects, with the base amount starting out at ₹1 lakh per square kilometre, along with bids based on viability gap funding.
Source: livemint
