Solar Energy Corporation of India has issued two big tenders for the development of 4 GW of solar as well as wind energy capacity. It has further offered 2 GW of capacity under the 9th edition of national power auctions.
Developers who are participating would be free to develop the projects at a location of their choice. SECI would aggregate the demand from several other states who are looking in to purchase solar power and would work as an intermediary between the states and solar power generations.
The most notable change in the new tender is the exclusion of tariff caps. In the earlier tender, which was issued in January of 2020, the energy body had set Rs 2.78/kWh as the maximum tariff cap. Developers had also been provided 1.2 GW of capacity, meanwhile bidders submitted the offers to set up a capacity of 3.5 GW. The winning bids were also very low despite high competition.
Goldman Sachs funded ReNew Power, EDEN Renewable, AMP Energy, and Softbank based SB Energy secured projects at about Rs 2.50/kwh with a 10% discount on the tariff cap. In spite of the discount given by developers as well as the massive interest shown during the previous tender, SECI had been forced to give incentives such as removal of the tariff caps since numerous developers are struggling financially. In addition, SECI has also offered 2 GW of wind energy by the way of another tender.
Wind energy sector’s challenges seem to be more serious in comparison to the solar power sector. Lack of adequate transmission infrastructure, small number of manufacturers and developers, limited number of possible project sites has further made the sector susceptible to scarcity of liquidity. Recently, India Ratings downgraded the outlook for the wind energy sector of India to negative from stable and maintained a stable rating for solar power sector.
Both the tenders do not have a tariff cap which had been a long-term demand from the developers of renewable energy. This main change in the renewable energy policy of India would likely be successful in bringing back the developers to the auctions.