India

India

Underwhelming appetite for India's first wind-solar tender

INDIA: The first 1.2GW wind-solar hybrid tender received bids for only 1.05GW of capacity from two participants.

Hero Future Energies, which did not take part in the auction process, commissioned a hybrid project in April 2018
Hero Future Energies, which did not take part in the auction process, commissioned a hybrid project in April 2018

The tender, originally launched in May for 2.5GW of capacity, was downscaled to 1.2GW following transmission connectivity constraints.

It subsequently faced delays as a result of numerous bid queries and requests for clarifications and modifications.

Only two parties — Adani Green Energy and SB Energy, backed by Softbank group from Japan, bid for 600MW and 450MW capacity, respectively, by the deadline this month (November 2018).

The absence of major players such as ReNew Power, Hero Energy and Sembcorp from the tender suggests that there are doubts over the feasibility of the projects considering the aggressively low ceiling tariff of INR 2.70/kWh ($38.62/MWh).

The original INR 2.60/kWh ($37.19/MWh) ceiling tariff for the tender had been revised upwards in response to industry concerns about the viability of projects.

The industry had, in fact, suggested to the renewable energy ministry that hybrid projects should not be looked at solely from a cost perspective and requested that the ceiling tariff be removed altogether.

Another reason for the lack of interest appears to be the paucity of optimal sites as the best sites for wind-solar hybrids are in states such as Gujarat and Tamil Nadu, which are already saturated with projects and struggling with grid connectivity access.

This was stage one of the process. Usually an auction would take place following the evaluation and clearance of the technical bids from these two players.

But it remains to be seen how soon the authorities will move to the auction stage considering the response to the tender.

Although some industry players suggested the possibility of a tender annulment or capacity restriction, an administration official clarified that there is no condition for restricting reverse auctions and the government can award the project even to a single bidder under tender rules.

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