There is a perceptible shift in the renewable energy industry, from standalone solar and wind projects to hybrid, round-the-clock (RTC), firm and despatchable renewable energy (FDRE) projects. Several auctions have taken place in this space in the past year. According to Renewable Watch Research, during October 2023-November 2024, 16 solar-wind hybrid, eight FDRE and RTC, and six energy storage auctions took place. Renewable Watch presents an overview of the recent auctions, policy developments, key challenges and future outlook…
Wind-solar hybrid auctions
The government announced the National Wind-Solar Hybrid Policy in 2018 to promote large grid-connected wind-solar hybrid systems. Since then, wind-solar hybrids have seen a significant increase in the number of tenders floated and auctioned. In the past year too, around 16 wind-solar hybrid auctions took place. Only four of these were conducted at the state level. Torrent Power was the only private company to conduct a wind-solar auction. The tariffs did not trend in any particular direction during the year but fluctuated in the range of Rs 2.99 to Rs 3.69 per kWh. The lowest tariff of Rs 2.99 per kWh was discovered in Gujarat Urja Vikas Nigam Limited’s (GUVNL) 500 MW wind-solar auction, which KPI Green Energy won 50 MW. Meanwhile, at the central level, the lowest tariff in the past year was Rs 3.15 per kWh, bid by NTPC Renewable Energy for 300 MW in Solar Energy Corporation of India Limited’s (SECI) 2,000 MW ISTS-connected wind-solar hybrid (Tranche VII) auction.
A summary of the recent auctions conducted by central agencies:
SECI
SECI is actively driving the growth of wind-solar hybrid projects through large-scale auctions. In June 2024, it declared auction results for 1,200 MW of ISTS-connected wind-solar hybrid power projects (Tranche VIII). Juniper Green Energy (150 MW) and Avaada Energy (240 MW) quoted Rs 3.43 per kWh and Rs 3.46 per kWh respectively. Asurari Renewables (UPC Renewables) (300 MW), JSW Energy (300 MW), AmpIn Energy (150 MW) and Adyant Enersol (Datta Power) (60 MW) won bids at Rs 3.45 per kWh.
In January 2024, SECI declared the results of its auction for the development of 2,000 MW of ISTS-connected wind-solar hybrid power projects (Tranche VII). At a tariff of Rs 3.21 per kWh, Juniper Green Energy and Green Infra Wind Energy (Sembcorp) won 150 MW and 450 MW respectively. NTPC Renewable Energy Limited (REL) won 300 MW by quoting Rs 3.15 per kWh. Only 900 MW of the total capacity was auctioned.
NTPC Limited
NTPC’s multiple auctions in the past year, covering a cumulative capacity of over 5 GW, indicates a growing interest in hybrid projects. The key details of the auctions conducted by it are as follows:
In December 2023, NTPC announced the results of its auction for 1,500 MW of ISTS-connected wind-solar hybrid power projects. O2 Power (300 MW) and Sprng Energy (250 MW) quoted Rs 3.35 per kWh. ACME Cleantech Solutions and Juniper Green Energy were granted 300 MW and 230 MW at a tariff of Rs 3.36 per kWh each. Avaada Energy won 24 MW at Rs 3.37 per kWh. Only 1,104 MW of the total capacity was auctioned.
In March 2024, NTPC auctioned 1,500 MW of ISTS-connected wind-solar hybrid power projects (Tranche IV), in which ABC Cleantech won 750 MW by quoting Rs 3.27 per kWh and Juniper Green Energy won 300 MW at Rs 3.29 per kWh. The remaining winners included ACME Cleantech Solutions (150 MW) and ReNew Solar Power (300 MW) at Rs 3.32 per kWh each.
In April 2024, NTPC auctioned 1 GW of ISTS-connected wind-solar hybrid power projects (Tranche V). Sprng Energy, AmpIn Energy Transition and Juniper Green Energy were allotted 150 MW each at tariffs of Rs 3.41 per kWh, Rs 3.42 per kWh and Rs 3.43 per kWh respectively. Meanwhile, ReNew (300 MW) and Avaada Energy (250 MW) won bids by quoting Rs 3.44 per kWh and Rs 3.47 per kWh respectively.
In July 2024, NTPC auctioned 1,000 MW of ISTS-connected wind-solar hybrid power projects (Tranche VI). Juniper Green Energy (150 MW) and Avaada Energy (230 MW) quoted Rs 3.43 per kWh and Rs 3.46 per kWh respectively. JSW Neo Energy won 300 MW, TEQ Green Power secured 250 MW and Adyant Enersol won 70 MW at a tariff of Rs 3.45 per kWh each.
The L1 tariffs (Rs 3.27-Rs 3.41 per kWh) for wind-solar hybrid auctions conducted by NTPC round the year were nearly a rupee higher than the L1 tariffs discovered in its most recent solar auction (Rs 2.50 per kWh in the 1.2 GW ISTS-connected solar auction held in October 2024).
Other noteworthy trends have been consistent participation by key players and the bidding of large capacities.
NHPC Limited
During the past year, NHPC conducted just one hybrid auction, which was held in February 2024. The 1.5 GW ISTS-connected wind-solar hybrid auction saw Juniper Green win 150 MW, Energizant Power 300 MW and Avaada Energy 510 MW by quoting Rs 3.48 per kWh, Rs 3.49 per kWh and Rs 3.49 per kWh respectively. More than 540 MW of capacity was not auctioned. In comparison, the L1 solar tariff for NHPC’s most recent solar auction, conducted in September 2024, was Rs 2.56 per kWh, almost Re 1 per unit less than the L1 tariff for NHPC’s wind-solar auction.
SJVN Limited
The results for SJVN’s auction to develop 1,500 MW of ISTS-connected wind-solar hybrid power projects were announced in February 2024. Juniper Green Energy won 150 MW at Rs 3.43 per kWh, Datta Power Infra won 50 MW at Rs 3.47 per kWh and Avaada Energy won 530 MW at Rs 3.49 per kWh. Green Infra Wind Energy (440 MW), Energizent Power (270 MW) and Green Prairie Energy (60 MW) were the other winners at a tariff of Rs 3.48 per kWh.
In June 2024, SJVN Green Energy awarded 1.5 GW of ISTS-connected wind-solar hybrid power projects to Ganeko Solar (300 MW), AmpIn Energy Transition (50 MW), Juniper Green Energy (150 MW), Datta Power Infra (70 MW) and Inaayu Renewables (EverGreen Power) (60 MW) at a tariff of Rs 3.41 per kWh each. Avaada Energy and JSW Energy were granted 470 MW and 300 MW, respectively, at a tariff of Rs 3.42 per kWh.
In November 2024, the company declared the results of its auction for 1.2 GW of ISTS-connected wind-solar hybrid power projects (Phase III). At a tariff of Rs 3.19 per kWh, Gentari Renewables India Utilities 2, Juniper Green Energy, EG Energy Development (Enfinity Global), Sunsure Solarpark RJ One and Adyant Enersol (Datta Infra) were allotted 400 MW, 300 MW, 300 MW and 70 MW respectively. Sunsure won 130 MW through the bucket-filling method at the same tariff.
At the state level, GUVNL and Maharashtra State Electricity Distribution Company Limited were the only two agencies that conducted auctions for wind-solar hybrids. In the GUVNL auction, the tariff range was Rs 2.99 to Rs 3.39 per kWh. In Maharashtra, it was comparatively higher at Rs 3.60 to Rs 3.69 per kWh. The lower range in Gujarat is indicative of its geographical advantage of higher wind speeds.
Notably, while the number of auctions and capacities grew, there were multiple cases where the entire tendered capacity was not allocated. The lack of interest can perhaps be attributed to the high cost of project development, complicated tender criteria and limited sites for hybrid project development. These concerns need to be addressed going forward.
FDRE and RTC
FDRE and RTC tenders aim to ensure greater availability of renewable energy compared to normal solar-wind hybrid projects and during the past year, several auctions took place in this space.
The biggest FDRE auction for the year was conducted by NTPC for 3,000 MW of FDRE power in March 2024. However, over 1,416 MW was not allocated. Meanwhile, the smallest FDRE auction was conducted by SECI for 630 MW. The entire tendered capacity was allocated.
The L1 range observed for auctions in the entire year was Rs 4.25-Rs 5.59 per kWh. Meanwhile, the highest tariffs in the auctions were in the range of Rs 4.26-Rs 5.60 per kWh. The lowest tariffs in both ranges were discovered in SJVN’s auction in October 2024 (Rs 4.25 to Rs 5.59 per kWh) for the supply of 1,200 MW of FDRE power while the highest tariffs (Rs 5.59 to Rs 5.60 per kWh) in both ranges were observed in SECI’s auction for 1,500 MW of firm and despatchable power (Tranche II).
Both the lowest and highest tariffs observed a similar trend. The tariffs rose slowly, from Rs 4.55 per kWh (L1)/Rs 4.64 per kWh (highest bid) in NHPC’s 1,500 MW auction to reach their highest point in SECI’s 1,500 MW auction in July 2024 (Rs 5.59 per kWh L1 and Rs 5.60 per kWh highest bid). A decline was observed in the following three auctions. However, for NTPC’s 1,200 MW auction held in November 2024, the tariffs witnessed an increase to Rs 4.69 per kWh (L1 bid) and Rs 4.70 per kWh (highest bid). This was immediately after SJVN’s 1,200 MW FDRE auction, which witnessed the year’s lowest tariffs.
SECI’s auction for 1,500 MW of firm and despatchable power (Tranche II) was the only auction in which tariffs rose above Rs 5 per kWh. In all the other auctions, both the lowest and highest tariffs remained in the range of Rs 4.25-Rs 4.99 per kWh.
Meanwhile, only one RTC auction took place in the previous year (REMCL’s 750 MW RTC auction), in which Torrent Power won 100 MW at Rs 4.25 per kWh and Tata Power Renewable Energy Limited won 50 MW at Rs 4.43 per kWh. Other winners were ReNew Solar Power (200 MW), O2 Power (100 MW), NTPC REL (200 MW) and ACME Cleantech Solutions (100 MW) at a tariff of Rs 4.37 per kWh.
Energy storage
The need for battery energy storage systems (BESS) is growing significantly, prompting government action. At the current tariffs, BESS is economically unfeasible for many developers. To address this, in March 2024, the Ministry of New and Renewable Energy released the viability gap funding (VGF) scheme for BESS development for three years, from 2023-24 to 2025-26. According to this scheme, the central government will provide VGF of up to 40 per cent of the project’s capital cost. The total allocation for the scheme is Rs 94 billion. By offering VGF support, the scheme aims to achieve a levellised cost of storage in the range of Rs 5.50-Rs 6.60 per kWh. Meanwhile, industry focus is also on pumped storage projects (PSPs) and green hydrogen with a number of projects under construction and in the pipeline. PSPs are considered a cost-effective storage option in the long run and are already being clubbed with solar-wind projects to provide RTC renewable energy supply. Going forward, more such projects can be expected.
In the past year, six energy storage auctions took place. Out of these, one was conducted by NTPC Vidyut Vyapar Nigam Limited (NVVN), one by SJVN and two by GUVNL and SECI each.
Both the GUVNL auctions were for standalone BESSs. Gensol and IndiGrid were the winners of GUVNL’s 250 MW/500 MWh auction held in March 2024. Gensol won 70 MW/140 MWh by quoting Rs 448,996 per MW per month, and IndiGrid won the remaining 180 MW/360 MWh by quoting Rs 449,996 per MW per month. In GUVNL’s next auction in June 2024 for setting up a 500 MW/1 GWh (including the greenshoe option) standalone BESS, Gensol Engineering won by quoting the lowest bid amount of Rs 372,978 per MW per month without VGF.
At the national level, SJVN held a 1.5 GW renewable energy with storage auction in November 2023, with a tariff range of Rs 4.38 per kWh to Rs 4.39 per kWh. Further, SECI conducted two auctions. The first one was for a 1,000 MW/2,000 MWh standalone BESS, held in September 2024. The bid amount range for this auction was Rs 381,000 per MW per month to Rs 381,999 per MW per month, and it was won by JSW Neo Energy and Reliance Power respectively.
The second auction was for a 1.2 GW solar power with energy storage project (Tranche XV). A tariff range of Rs 3.41 to Rs 3.42 per kWh was observed. Compared to the tariff range of ground-mounted solar projects without energy storage in the entire year (Rs 2.48 to Rs 2.72 per kWh), this is significantly higher. JSW Neo Energy won 500 MW of capacity in both auctions. NVVN’s auction for 500 MW/1000 MWh standalone BESS in October 2024 included VGF support. There was a significant decline in the bid amount, which was in the range of Rs 236,999-Rs 238,000 per MW per month. This was possible due to VGF support.
SECI also awarded a tender to Prozeal Green Energy for the design, EPC and O&M of a 25 MW solar project with an integrated BESS in Leh, Ladakh, for Rs 3.13 billion.
A steady decline in tariff prices for BESS has been observed. For the GUVNL auction in March 2024, the tariffs were Rs 448,996 per MW per month. They decreased to Rs 372,978 per MW per month in June and rose slightly to Rs 381,000 per MW per month in SECI’s September 2024 auction for a 1,000 MW/2,000 MWh standalone BESS. After the provision of VGF support, a sharp fall in tariff was observed. In the NVVN auction, the lowest bid amount was Rs 236,999 per MW per month. This implies a difference of Rs 211,997 per MW per month in the L1 range itself.
Key challenges and the way forward
Despite a promising future, several challenges lie ahead for FDRE and RTC renewable projects. Key bottlenecks facing RTC renewable energy projects pertain to high costs involving integration of storage projects. Due to the high cost of production and tariffs, finding offtakers for the power generated becomes difficult. Hence, there is a risk of developers relying on a combination of renewables and thermal power.
Consequently, oversized renewable energy plants are being developed to meet RTC requirements. Further, setting up these plants across multiple locations poses significant transmission connectivity challenges. Additionally, future risks such as supply chain disruptions, import duties and taxes on solar components, and rising input costs could drive up the overall cost of solar and other renewable energy projects. This raises concerns over whether discoms will be willing to purchase RTC power to meet peak demand, particularly given their obligation to pay fixed costs for thermal power.
The issue of expensive RTC power persists as storage technology prices have not fallen as expected. Hence, developers are turning to pumped storage projects, which are viewed as the most cost-effective long-term solution. Green hydrogen is also gaining traction as a promising storage option to prevent curtailment of surplus renewable energy. The complex rules and provisions governing RTC tenders add to developers’ challenges, with strict penalties in place. This complexity is exacerbated by the difficulties in accurately forecasting and scheduling power, making the process more burdensome for developers.
Despite these hurdles, a positive change has been that storage prices are showing a downward trend. In the past year too, the prices dropped, particularly in China, where the cost of turnkey energy storage systems plummeted by 43 per cent in February 2024 compared to the year before, reaching a record low of $115 per kWh for two-hour energy storage systems, according to Bloomberg NEF.
Apart from falling energy storage prices, key government initiatives for the RTC renewables segment in India include the VGF for BESS, a policy impetus for PSPs and green hydrogen along with an increase in industry participation, and a tender trajectory, which is expected to include more and more RTC auctions. Going forward, to further promote the development of hybrid, RTC and FDRE projects, it is imperative to strengthen grid infrastructure, simplify tender guidelines, support a further fall in energy storage costs with capital subsidies and achieve economies of scale.
Net, net, while hybrid, RTC and FDRE projects come with their own set of challenges, they show a promising path forward to meet energy needs through cleaner fuel sources while being reliable. Government support and industry uptake of new technologies remain crucial to further drive renewables growth.
