Auction Outcome

GUVNL announces Gujarat wind tender results

After a long delay, the results of the 500 MW wind power auction conducted by Gujarat Urja Vikas Nigam Limited (GUVNL) have finally been announced with six companies winning contracts to set up this capacity.

The tender was announced by GUVNL on June 15, 2017, and the financial bid opening was initially scheduled for November 16, 2017. However, the Indian Wind Energy Association (IWEA) filed a petition against the proposed reverse auction. According to the IWEA, the Gujarat Electricity Regulatory Commission had issued a tariff order for signing wind power purchase agreements at Rs 4.19 per kWh, which is valid up to March 31, 2019, and this tariff will be considered for all new wind capacities till then. The Gujarat High Court called for a hearing on the matter on October 30, 2017, and ruled in favour of GUVNL to conduct the auction. A total of 18 bids were received for a capacity of 2,139 MW, of which 12 bids were selected for the financial bid opening.

The financial bid opening was conducted on December 21, 2017 and six bidders were selected based on their quoted wind tariffs. Sprng Energy Private Limited and KP Energy Limited emerged as the lowest bidders with a tariff of just Rs 2.43 per kWh. This is the lowest tariff ever achieved in any wind or solar power auction. The lowest bid for a solar power project was Rs 2.44 per kWh, achieved in May 2017 for the capacity tendered under Phase III of the Bhadla Solar Park in Rajasthan.

The other winners of the wind power tender are Verdant Renewables Private Limited, Betam Wind Energy Private Limited and Powerica Limited, all of which quoted a tariff of Rs 2.44 per kWh, and ReNew Power, which quoted a tariff of Rs 2.45 per kWh.

Notably, all bids received in the auction were sub-Rs 3 per kWh. The highest bid of Rs 2.95 per kWh was placed by Hero Wind Energy, followed by Orange Renewable Power (Rs 2.90 per kWh) and Mytrah Energy (Rs 2.80 per kWh).

The results of GUVNL’s 500 MW tender show that the competitive bidding mechanism for wind project allocation has spurred activity in the wind power segment. This is the fourth round of wind project auctions held after February 2017, when the centre introduced bidding in the segment, and tariffs are already touching rock bottom levels. The lowest winning tariff recorded under the Solar Energy Corporation of India’s 1 GW auction was Rs 3.46 per kWh in February 2017, which dropped further to Rs 3.42 per kWh in August 2017 in TANGEDCO’s 500 MW auction. In sum, wind tariffs have dropped by about 30 per cent since February 2017, bringing the rates at par with thermal power.

Wind tariff trends

Industry experts feel that the reverse wind auction will act as a catalyst for accelerated deployment of wind energy, and lead to a transfer of power from a handful of private parties to the states. The states will now actively start conducting wind power auctions to meet their renewable purchase obligation targets, and focus more on generating clean energy. Also, in April 2017, the central government issued draft guidelines for competitive bidding for wind power projects, to facilitate reverse auctions in the states. However, the results of the competitive bidding process will be visible only after a year when the capacity auctioned so far will come online. The segment is likely to miss the target for 2017-18 but pick up pace by end-2018.

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