As the government continues to focus on increasing renewable energy capacity, solar and wind power tariffs are likely to dip below Rs 2 per unit in the next 2-3 years, a senior official of transmission firm Sterlite Power said. “Solar power has already reached Rs 2.4 per unit, while wind is selling at Rs 2.50 per unit. This will continue to go down…below Rs 2 in the next 2-3 years”, Sterlite Power CEO of global infrastructure business Ved Tiwari told PTI. The solar power tariff fell to an all-time low of Rs 2.44 per unit during the auction of 500 MW of capacity at Bhadla (III) in Rajasthan. The government had offered viability gap funding (VGF) for the project. “During 2017, solar power tariff hovered around Rs 2.40 per unit only in auctions for capacities, where viability gap funding component was there,” Tiwari said. Wind power tariff, on the other hand, dropped sharply to Rs 2.43 per unit during an auction conducted by Gujarat Urja Vikas Nigam Ltd (GUVNL) last year.
Tiwari further said with abundant solar and wind potential, southern states like Andhra Pradesh, Telangana, Tamil Nadu and Karnataka, have the opportunity to become exporters of power. “Earlier, power used to be transported to states like Tamil Nadu and Andhra Pradesh and Telangana. But this situation has now changed. States like Telangana, Karnataka, Tamil Nadu, Andhra Pradesh are blessed with best of solar radiation and wind energy. These states will become exporters of power,” he said. However, he emphasised on the need for enhancing transmission network saying that the economic power can be unleashed for these states if India invests in power transmission.
“Just like India builds highways and roads that unleashes economic potential, much more economic potential may be created by power transmission lines. The country should build more and more power corridors, which would enable states to freely exchange very cheap electricity,” Tiwari added.
To achieve the target of having 60 gigawatt (GW) of installed wind energy capacity by 2022, the government has invited tenders for 2,000 MW of wind power projects connected to the inter-state transmission system. The Solar Energy Corporation of India (SECI) would sign 25-year power purchase agreements (PPAs) with the winning bidders and sell the power to electricity distribution utilities (discoms). The ceiling tariff has been set at Rs 2.93 per unit. A company can bid for a minimum capacity of 50 MW and a maximum capacity of 300 MW. Acquiring land, permissions and other infrastructure to connect the upcoming wind projects to the electricity grid would be the responsibility of the developer.
Power and renewable energy minister RK Singh had in November announced the break up of his action plan for completing 28 GW of wind auctions by FY20, leaving a margin of two years to complete the projects by 2022. According to that agenda, another 1.5-2 GW of wind tenders can be expected in the ongoing fiscal. The present wind power installed capacity in the country is nearly 32.5 GW, comprising around 9% of total power generation capacity. Globally, India is at fourth position in terms of wind power installed capacity after China, the US and Germany. Capacity addition of wind energy had ebbed in the first half of FY18 with only 421 MW added in the period after the record 5.5 GW addition in FY17.
The ministry of new and renewable energy introduced the competitive bidding system for wind power procurement in February 2017, marking a shift from the feed-in tariff (FiT) regime. The reverse auction mechanism helped SECI discover an unprecedented low price of Rs 2.64 per unit. Later, Gujarat recorded wind power tariffs of as low as Rs 2.43/unit in December 2017, nearly half the average Rs 4.5/unit wind tariff under FiT.
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