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India releases new policy draft for auctions

INDIA: The energy ministry is seeking industry comments on a new draft policy aimed at strengthening the auction process.

India's energy ministry is looking to improve the auction and payments processes
India's energy ministry is looking to improve the auction and payments processes

The first ever federal auctions for 1GW wind power early this year saw record low bids. As a result, India is transitioning towards bidding for wind power capacity instead of the feed-in-tariff regime that sustained the wind industry for over two decades.

This new policy draft is a timely intervention by the ministry to get stakeholder consensus on evolving a robust policy for wind power bidding by different states.

Past attempts by many states to hold wind power auctions have not worked because of the perceived risks related to prompt payments and curtailment.

Many state utilities have not been paying wind generators on time and have curtailed wind generation in low demand period without compensating the generators.

To address these issues, the draft suggests measures such as a revolving letter to credit and payment security fund to ensure utility payments to generators on time. It also proposes a compensation mechanism for backing down of wind generation due to grid congestion or generation curtailment.

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