The results of the much-awaited Solar Energy Corporation of India’s 2.5 GW round-the-clock auction for grid-connected renewable power bundled with thermal projects were released in October 2021. This is the first such auction conducted in India, and it has been a largely successful one with the lowest discovered tariff touching Rs 3.01 per unit. Five bidders won capacities in this auction, with Hindustan Thermal Projects emerging as the L1 bidder, winning 250 MW of capacity at a tariff of Rs 3.01 per unit, which is quite cost competitive.
The other winners are Greenko Energies, ReNew Samir Urja, Power Mech Projects and JSW Neo. Greenko Energies bid for 1,001 MW of capacity at Rs 3.18 per unit, ReNew Samir Urja bid for 600 MW at Rs 3.19 per unit, Power Mech Projects bid for 550 MW at Rs 3.30 per unit and JSW Neo bid for 600 MW at Rs 3.45 per unit but has been awarded 99 MW.
The tender was issued in March 2020, with a much higher capacity of 5 GW. However, it was later amended, and the total capacity was halved. The winning bidders will have to now tie up with a non-renewable energy project for their power purchase agreements to be signed.
The four bidders with higher tariffs will have to match the lowest winning tariff of Rs 3.01 per unit to obtain letters of award. However, there is a significant difference in the quoted tariffs, which range from Rs 3.01 to Rs 3.45 per unit, from the lowest to the highest bid. Moreover, the winning bidder, Hindustan Thermal Projects, has only bid for 250 MW while others such as Greenko Energies and ReNew Samir Urja have bid for much higher capacities. Thus, it may be challenging for these players to settle for the lowest tariff, especially in the current environment, which is laden with uncertainties on the project cost front.
Despite these issues, this exploratory auction is a step in the right direction as it aims to address many of the challenges facing the power system today. Firstly, it bundles renewable energy and energy storage with thermal power to ensure cost-competitive offtake of all energy sources. Secondly, this bundled power, with a diverse energy mix, will help address the intermittency issue of renewables and ensure a stable grid. Thirdly, it will help in better utilisation of the available transmission capacity, thereby, deferring transmission expansion.
Net, net, by bundling cheaper renewables with expensive thermal power, the government aims to create a win-win solution for developers, grid operators as well as discoms. With the success of this maiden auction, more such tenders can be expected in the future.