SECI's tender for 1.2GW of wind in India flops

Only four players made bids for 600MW of capacity with tariffs fixed at $0.04/kWh for 25 years.

The 1,200MW or 1.2GW wind tender of the Solar Energy Corporation of India Limited (SECI) has been undersubscribed to the extent of 50%.

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 $0.04 (INR 2.83) per kWh for the entire term of 25 years.

Harminder Singh, power analyst at GlobalData noted that 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, Singh said. “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.”

The analyst added that whilst 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.”