Debut tender shows wind can compete in India's renewables race

ANALYSIS | Indian solar's downward price spiral threatened to leave wind in its wake, but last week's auction closed the gap, writes Andrew Lee

India’s solar sector has spent the last 18 months on a tender-driven downward cost spiral that threatened to leave wind power looking expensive by comparison – but the gap closed on Friday.

The first 1GW reverse auction for large-scale wind deployment in India delivered prices as low as 3.46 rupees/kWh (0.052/kWh), well down on the rates of around 5 rupees or more seen in the tariff-based mechanisms used to procure wind in the country up to now.

The Indian government was quick to hail the process – designed to spur inter-state transmission of renewable energy – as a triumph. “That was only the first 1GW, there’s a lot more to happen,” said power minister Piyush Goyal.  Officials said over the weekend that the next tender will come in the new fiscal year.

The unexpectedly aggressive pricing seen in the debut tender came soon after solar kept up its own downward pressure with prices that dipped below three rupees/kWh in a recent state auction.

If wind’s first foray into the raw competition of an auction had left too wide a disparity, it could have been left looking distinctly unattractive. In the event, wind now has a case to economically transport clean power out of wind-rich states such as Tamil Nadu and Gujarat  to areas less blessed by strong resources, but needing to fulfil their own renewables obligations.

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The low prices have inevitably raised questions about the economics underpinning the projects, given some unhappy precedents of ultra-low bidding in the country’s solar sector.

But Mytrah Energy, one of the 250MW winners in the tender, is at pains to stress its proven credentials in a country where it has already delivered more than 1GW of operating wind power.

The London-listed developer told Recharge in a statement: “Mytrah has invested heavily in developing a science-led, technology-assisted approach to its business. The company has used its expertise in environmental studies and data analysis to build a deep project pipeline which has enabled its active participation in the recently concluded auction process.”

Mytrah added: “On the execution front, Mytrah has industry leading capabilities in areas ranging from project financing to procurement, logistics and construction. This robust platform, combined with strong vendor relations, allows it to be the lowest cost operator in the sector.”

The company – which is also active in the solar sector – is in no doubt over the wider significance on last week’s tender.

“The level of participation in the recent solar and wind auctions point to the coming of age of the industry. The auctions have been hard fought and have led to tighter pricing than one would have foreseen even a few months earlier. This speaks to the growing confidence of the players in their ability to deliver projects on terms that are globally competitive.”

With clean energy targets that are among the most ambitious in the world, India wants to more than double its installed wind capacity to 60GW in 2022 from about 28GW now. Last week’s tender keeps up the momentum.

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