Gujarat recorded the lowest ever tariff of INR 2.43/kWh ($0.037/kWh) in its first auction last year.
The new 500MW auction announced by the state utility allows overseas investors, in addition to Indian players, to bid with the provision that they will have to create special purpose vehicles (SPVs) under the Indian Companies Act.
The auction terms stipulate a minimum bid size of 25MW and a 25-year power purchase agreement (PPA) with the utility.
Developers will have to provide financing for their projects within seven months from the PPA signing date. The deadline for bid submission is 2 April.
Interestingly, going beyond the bid capacity on offer, the utility has proposed a "greenshoe option".
This will allow it to award an additional 500MW capacity to successful bidders that are willing to match the lowest successful bid in the auction.
Central utilities and government sector enterprises will be given priority allocation for this additional quota.
Considering that past auctions were oversubscribed and also had negligible difference in bid spread, the "greenshoe option" could be a great way for the utility to get additional 500MW without conducting another auction.
Meanwhile, Maharashtra's first wind power auctions saw tariffs average nearly 17% more than the lowest tariff of INR 2.44/kWh ($0.037/kWh) in the federal 2GW auction last month.
In the recently concluded Maharashtra wind-power auction for 500MW, developers Adani Green and KCT Renewables offered 75MW capacity each at the lowest tariff of INR 2.85/kWh ($0.044/kWh).
Mytrah Energy won 100MW, Inox Wind secured 50MW, Hero Wind Energy will build 75.6MW and Torrent Power was awarded 124.4MW of capacity.
The highest winning tariff was INR 2.87/kWh ($0.045/kWh).
The increase in bid prices was not totally unexpected as Maharashtra does not have high quality wind resources like Gujarat and Tamil Nadu.
The state is also seen as a relatively high-risk destination because of delay in payments and other issues related to utility applications and approval processes.