18 Apr 2019
Posted in Press Release
Weak response to SECI’s wind tender shows the price sensitivity of developers, says GlobalData
Following the recent news (April 17 2019) that SECI’s 1,200 MW wind tender has been undersubscribed to the extent of 50%,
Harminder Singh, Power Analyst at GlobalData, a leading data and analytics company, offers his views on the weak response to the tender:
“The tender has seen bids from only four players, for a total of 600 MW of capacity, which is half of the total capacity on offer. The maximum tariff payable to each wind project developer was fixed at INR 2.83/kWh for the entire term of 25 years. This is very slightly lower than INR 2.85/kWh fixed in the previous auction, Tranche VI, which was oversubscribed significantly with 2,325 MW of bids submitted for allocation of 1,200 MW capacity. The lowest tariff witnessed in this auction was INR 2.82. The significant difference in the responses to two tenders within a period of two months shows the high price sensitivity of wind project developers.
“Wind capacity addition has been declining in India, with the capacity addition in 2018 estimated at just above 1,600 MW and for 2017 at around 1,766 MW. Compared to this, the capacity addition saw a record high of 5,500 MW in 2016. While auctions have been successful in bringing down the tariffs, this may not hold well in future, since the costs are not expected to decline fast enough for wind as compared with its counterpart solar PV. Furthermore, land acquisition and financing issues continue to trouble the developers and the limited availability of good wind sites will mean that as developers move to medium or low wind sites, they will require higher tariffs to maintain the viability of projects.. It will be interesting to see what lessons will be learnt from this auction and how SECI will respond in its forthcoming wind auctions.”