Clouds of uncertainty are hovering over 1,000 MW of wind projects in Gujarat. After awarding the capacities in May 2019, the Gujarat Urja Vikas Nigam Limited (GUVNL) has now asked all the bidders to match the lowest (L1) tariff discovered in the auction.

In that auction, the following tariffs were quoted:

A GUVNL official confirmed the development to Mercom saying, “There is a difference of 15 paise (~$0.002)/kWh in the lowest tariff and the tariff quoted by the last winner. This is not acceptable, and the GUVNL has decided to provide all the bidders with an option to match the lowest tariff.”

When asked if the GUVNL is considering to overlook bidders who quoted a tariff of ₹2.81 (~$0.0401)/kWh, the GUVNL official said, “That cannot be done. Right now, we have provided seven days to the bidders to match the lowest tariff. We are trying to fathom who is ready to do that and then, we will go ahead from there.”

If no one is ready to match the lowest tariff, will the capacity be awarded only to the lowest bidder or will the entire auction be scrapped? To this, the GUVNL official replied inconclusively, “We are yet to decide on that. Let’s first see the response of the bidders.”

One of the winners at the Gujarat auction also confirmed this development, saying, “Now, anything below ₹3 (~$0.043)/kWh is tough to execute and sustain in the wind sector. This doesn’t bode well.”

Mercom had previously reported on how low tariffs for wind projects are a bone of contention between the stakeholders, and the government agencies. Since the introduction of reverse auctions, tariffs have plummeted and have remained at levels below ₹3 (~$0.043)/kWh. An increasing number of state agencies have even introduced wind tenders to meet their non-solar renewable purchase obligations (RPOs).

Image credit: Renew Power