The federal government's seventh tender round, seeking 1.2GW, received bids of only 650MW of which only 480MW was awarded.
The lowest succesful tariff of INR 2,790/MWh ($39.74/MWh) was from Engie for 200MW capacity.
ReNew Power bid for 50MW at INR 2,810/MWh ($40.02/MWh) and Sprng Energy bid INR 2,820/MWh ($40.17/MWh) for 100MW.
Adani Power bid INR 2,830/MWh ($40.31/MWh) for 300MW capacity but was allocated only 130MW in line with the tender rule that limits the maximum awarded capacity to 80% of bid capacity in case of undersubscription.
Just before the federal tender, the results of the second Gujarat state tender for 1GW, issued by state utility GUVNL, saw similar prices.
The tender received bids for 931.4MW of capacity, again lower than the targeted amount.
The lowest bid of INR 2,800/MWh ($39.9/MWh) was submitted by Anisha Power Projects for a 40MW project.
The second lowest bids were from Powerica and Vena Energy, which bid INR 2,810/MWh ($40/MWh) for 51.6MW and 100MW respectively.
The other entrants included Sarjan Realities, which bid INR 2,870 ($40.9/MWh) for 100.8MW and Viridi Clean Alternatives at INR 2,950/MWh ($42.1/MWh) for 100MW.
Regular auction participants, Inox Wind, ReNew Power and Adani Power bid INR 2,950/MWh ($42.1/MWh) for 40MW, 200MW and 300MW, respectively.
The capacity awarded to Adani power was curtailed to 113.6MW in line with the undersubscription rule.
Gujarat, which hosts some the best wind sites in the country, saw India’s record low bid for wind capacity of INR 2,440/MWh ($34.61/MWh) in 2017.
But it seems to be losing out on such cheap prices now due to a lack of land availability, as high potential wind areas are already taken.
The second federal wind-solar hybrid tender for 1.2GW, released in March, saw bids totalling to 900MW from two players Adani Power (600MW) and Renew Power (300MW – of which 120MW was awarded).
The second-stage tariff auction is expected to happen this month and bids will have to be below the ceiling tariff of INR 2.70/MWh ($38.46/MWh).
Interestingly, the first wind-solar tender for 1.2GW only saw bids of just over 1GW, and tariffs ranging between INR 2.67-2.69/MWh ($38.03-38.32/MWh).
This trend of undersubscription of tenders is a worry for the government that is aiming for 60GW of new capacity by 2022.
While the developers insist that there is market appetite for even larger capacities, the main reason for the low subscription, according to them, is the unrealistic ceiling tariffs that are giving very little margin for error.
In all recent tender results, the lowest bids have hovered close to the notified ceiling tariff suggesting that prices have bottomed out and there is margin only for upward movement.
Another reason for the low participation cited by developers is the unavailability of financing as banks are wary of lending at this level of tariffs.