The 3.46 rupees/kWh ($0.052/kWh) winning bids seen in India’s first large-scale wind power tender are likely to go up rather than down in future auctions according to the head of the Indian Wind Turbine Manufacturers Association (IWTMA), who also predicted installations in the country will temporarily dip in the next 12 months.

IWTMA secretary general DV Giri said the 3.46 rupees February outcome from the 1GW debut tender is “not a magic number” and “no kind of benchmark” for the future, suggesting it reflected high load factors and other benign conditions for developers bidding in projects in the wind-rich state of Tamil Nadu.

The low price achieved in the 1GW reverse auction was widely hailed – not least by Indian politicians – as a sign that wind could hold its own in the market with solar, which has seen its own spectacular price falls after competitive processes in India.

But Giri claimed “this 3.46 is not going to slide down, I think it’s going to go up” when larger future auctions start to encompass states with less favourable conditions.

The IWTMA – which counts the likes of Vestas, Gamesa, Suzlon, GE and Nordex among its members – is pressing for the next auction, due in early 2018, to be expanded to 5-6GW and include transmission charge waivers out to 2022.

The advent of auctions are spurring what Giri – speaking during a webcast organised by the Global Wind Energy Council (GWEC) – described as a “paradigm shift” from the previously dominant feed-in tariffs to auctions in the Indian market.

IWTMA expects no more than five states to continue with feed-in tariffs during 2017/18, with “the entire country under auctions” by 2020 at the latest, either via central government or state bodies.

The prices seen after this year’s auction – which sought power for transmission from wind-rich to less windy states – have already brought pressure to bear on the FIT system, Giri said. “After the first auction quite a few utilities with a FIT are saying why should I sign a PPA at 4.50 or 4.80 when the auction price is 3.46?”

He said developers and OEMs – who in the Indian market traditionally provide the full-scope of project services, from land acquisition right through to commissioning – “had a hard time explaining why this 3.46 rupees was not a magic number”.

Amid a fast-changing market, Giri said installations could fall to no more than 2.5GW in the 2017/18 financial year, down from the 4GW the body estimates was added in the 12 months ending March 2017.

He expects the fall to be a temporary one-year blip, with a bounce-back to “business as usual” in 2018/19 and up to 6GW.

To achieve that type of level – needed if India is to hit its 60GW wind target by 2022, double the figure in place now – the IWTMA has a shopping list of policy requests for the Indian government. High on that list are measures to ensure all states comply with ambitious renewable purchase obligation (RPO) targets and financial incentives for utilities that do the same.

Wind

Indian wind prices to rise from low auction debut: industry body