“Challenges in providing grid connectivity”

Views of SECI’s Jatindra Nath Swain

In 2016, the Solar Energy Corporation of India (SECI)  issued a 1 GW tender under the competitive bidding mechanism. This brought a transformation in the wind segment, pushing tariffs to as low as Rs 3.46 per kWh from the prevailing Rs 5 per kWh. After the successful allocation of projects under the first tender, a second tender for 1 GW of capacity has been launched. At the “Wind Power in India” conference organised by Renewable Watch, Jatindra Nath Swain, managing director, SECI, highlighted the key features of the wind tenders, the challenges faced by SECI, and the way forward. Excerpts…

As the nodal agency, SECI carried out the first transparent bidding in the wind energy segment initiated by the Ministry of New and Renewable Energy (MNRE) in collaboration with the Ministry of Power. The 1 GW tender was announced on June 14, 2016. The guidelines for the same were issued in October 2016 and the final capacity was allocated in February 2017. As per the guidelines, SECI had to complete the process of selecting the trading company before inviting bids for wind projects so that the bidders could have clarity on the counterparty before signing the power purchase agreement. The selected trading company was entitled to charge a trading margin as agreed mutually between the parties or as decided by the Central Electricity Regulatory Commission for long-term power purchases. The main objectives of the tender were to facilitate the supply of wind power from high-wind potential states to those with relatively low potential, encourage competitiveness by scaling up project sizes and introduce competitive bidding. The MNRE met the objectives by offtaking the power to discoms of non-windy states like Uttar Pradesh (499.9 MW), Bihar (200 MW), Jharkhand (200 MW), Assam (50 MW) and Odisha (50 MW).

On successful allocation of the first 1,000 MW capacity to Mytrah Energy (250 MW), Green Infra (250 MW), Inox Wind (250 MW) Ostro Energy (250 MW) and an additional 50 MW to Adani Green Energy, SECI decided to issue another tender for 1,000 MW on May 4, 2017. The guidelines for the new tender remained the same, except that an additional 100 MW can now be allocated to central public sector enterprises willing to undertake the development of interstate transmission system-connected projects on a build-own-operate basis. There was active participation in these two wind tenders, owing largely to SECI’s established reputation in the solar industry, project visibility, and the assurance of timely payments for fixed terms as per the MNRE guidelines. However, SECI faced certain challenges in terms of providing grid connectivity for the projects and substations, evacuation of power and grant of long-term open access. The developers that were granted capacity are still seeking connectivity approvals. The successful bidders of the first tender cannot execute projects owing to the lack of grid connectivity.

With regard to interstate connectivity, those who own the grid want to set up a plant in regions with higher wind speeds such as Tamil Nadu. This would allow them to generate electricity at competitive rates. The transmission network in these states has repeatedly come under scrutiny for failing to accommodate renewable power, thereby adding to SECI’s challenges. The limited enforcement of renewable purchase obligations (RPOs) by the government and lack of a comprehensive renewable energy law that can provide long-term certainty to investors about the policy and regulatory framework are other hindrances. The profitability of utilities continues to be under pressure. The delay in receiving payments from the financially burdened state discoms affects not only wind developers but also investor confidence in the segment. Despite these challenges, the future of wind power seems promising. The bids in the second tender were oversubscribed three times as compared to 2.5 times in the first tender, which is a positive sign for the segment. Interstate transmission and evacuation problems are also being addressed through Green Energy Corridor projects across India. There has been considerable improvement in RPO compliance by non-complying states such as Bihar. The Ujwal Discom Assurance Yojana has helped improve the financial health of discoms. States like Gujarat and Tamil Nadu have come out with independent wind tenders at the state level and other states like Rajasthan are expected to follow.

Given that the segment is expected to witness additions of 5 GW annually, with SECI implementing 40-50 per cent of the overall targeted capacity, the outlook for the segment is optimistic. In addition, SECI has proposed to incentivise states that meet their RPO targets. In sum, a visible project pipeline and greater authority with independent project developers, along with government initiatives will go a long way in achieving the set targets.

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