September 26

Winning power tariff inches up to Rs 2.77 per unit

Bengaluru- Wind power tariffs climbed in the latest auction of 1,200 MW of projects, reflecting concerns by developers over higher costs of transmission. Winning tariffs in the auction held on Tuesday were in the range of Rs 2.76-2.77 per unit, according to the Solar Energy Corporation of India, which conducted the sale. The lowest tariffs at the previous wind auction held in April were Rs 2.51-2.52 per unit. Adani Green Energy won 300 MW with a bid of Rs 2.76, while Torrent Power got 115 MW at the same tariff. Riyadh-based Alfanar and Sitac RE won 300 MW at Rs 2.77 per unit, while Ecoren Energy and ReNew Power got 175 MW and 10 MW, respectively, at the same price.

The increase in tariff was largely attributed to worries by developers about inadequate transmission facilities. Locations with wind speeds high enough to produce wind energy are limited, as are transmission substations operated by Power Grid Corporation of India (PGCIL).

“There are not that many sites still available that are close to PGCIL substations,” said a wind developer who did not want to be identified. “Locating projects at some distance from substations increases transmission costs and hence the higher tariff.”

Developers also figure that transmission facilities at the best wind energy locations are already fully loaded and may not be able to carry additional power unless their capacity is increased.

The auction allows developers to set up projects anywhere and link them to the inter-state transmission system. Tamil Nadu and Gujarat top the list of eight states in India that have sites with the best wind speeds, but many of their prime locations are already taken up. Others in the industry said tariffs had fallen too low and were now becoming realistic. “Developers have been getting feedback from banks telling them bluntly that they had made crazy assumptions in their eagerness to lower tariffs and win projects and financial closure will not be possible at the prices they had committed,” the developer said.

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