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<p>India’s wind sector has been around for much longer than the solar sector with steady installations of about 1.5 – 2.5 GW per year. Cumulative wind installations have reached 32 GW and currently account for more than 50 percent of installed renewable energy capacity in India. After the National Solar Mission (NSM) was announced, solar stole wind’s thunder with exponential growth and supporting policies, quickly becoming cheaper than wind.</p>
<p>The recent introduction of reverse auctions in India’s wind energy sector is proving to be a much-needed catalyst for growth. Earlier, only private developers were developing projects to sell power, but now states are actively tendering wind projects to meet renewable purchase obligations (RPO) and generate clean, green power. With the advent of reverse auctions, wind farms are now being developed in coordination with state governments and other implementing agencies.</p>
<p>Up to March 31, 2004, according to Ministry of New and Renewable Energy (MNRE) data, the total installed wind capacity in India was just over 2.5 GW. From 2004 to 2015, these installations hovered between 1 and 2.5 GW annually with installations crossing 3 GW only twice in advance of subsidy cuts.</p>
<p><a href="https://mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom.png"><img decoding="async" loading="lazy" class="aligncenter size-full wp-image-6708" src="https://mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom.png" alt="" width="733" height="351" srcset="https://cms.mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom.png 733w, https://cms.mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom-600x287.png 600w, https://cms.mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom-300x144.png 300w, https://cms.mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom-650x311.png 650w, https://cms.mercomindia.com/wp-content/uploads/2017/07/India_Wind_MNRE_Mercom-624x299.png 624w" sizes="(max-width: 733px) 100vw, 733px" /></a></p>
<p>In 2016, the year when MNRE came up with a reverse auction in wind, capacity additions totaled over 5 GW.</p>
<p>Wind projects were previously developed largely by private players for captive consumption or for sale to the state; the process was not transparent and the sector grew slowly. From 2002 to 2016 a total of over 32 GW of wind capacity was added to the grid at a rate of less than 3 GW/year.</p>
<p>To achieve MNRE’s target of installing 60 GW of wind power by 2022, the entire sector needs to grow at a much faster pace and the reverse auction may just be the boost needed for that growth.</p>
<p>In 2016, the Solar Energy Corporation of India (SECI) carried out the <a href="https://mercomindia.com/seci-auctions-1000-mw-wind/" target="_blank" rel="noopener">first-ever wind auction</a> in India. The sector has benefitted immensely ever since:</p>
<ul>
<li>Within six months of the first auction, another 2,500 MW of wind was tendered by state agencies.</li>
<li>Wind power tariffs have since gone down throughout the country.</li>
<li>The lowest wind tariff of Rs.3.46 (~$0.054)/kWh is on par with thermal power in some states.</li>
</ul>
<p><a href="https://mercomindia.com/wp-content/uploads/2017/07/Wind_tenders.png"><img decoding="async" loading="lazy" class="aligncenter size-full wp-image-6709" src="https://mercomindia.com/wp-content/uploads/2017/07/Wind_tenders.png" alt="" width="540" height="255" srcset="https://cms.mercomindia.com/wp-content/uploads/2017/07/Wind_tenders.png 540w, https://cms.mercomindia.com/wp-content/uploads/2017/07/Wind_tenders-300x142.png 300w" sizes="(max-width: 540px) 100vw, 540px" /></a></p>
<p><strong>What Developers are Saying:</strong></p>
<p>The introduction of the reverse auction has spurred activity in the wind sector, making it lucrative again, stated an Inox Wind executive.</p>
<p>Prices have gone down, benefiting both consumers and wind project developers alike. This has put wind costs almost on par with thermal and provided a push to the sector, stated a Wind World India executive. The executive added, “In the next few tenders, wind might go lower than thermal.”</p>
<p>A Southern Wind Farms executive said, “More projects are being tendered due to reverse auction and this a good trend. The sector will grow at a faster pace compared to before.”</p>
<p>This will lead to maximum utilization of the country’s wind power potential, stated a ReGen Powertech executive. The MNRE first suggested removing of inter-state transmission charges, then came up with a reverse auction in wind and now the green energy corridor is being developed. “These show that the government is finally providing proper support to the sector,” commented the executive.</p>
<p><strong> What Government Officials Say:</strong></p>
<p>An MNRE official told Mercom, due to the success of competitive bidding in wind, the generation-based incentive program for wind can be easily done away with and there will be a decrease in the accelerated depreciation rate for wind projects.</p>
<p>The General Manager (IPP) from Gujarat Urja Vikas Nigam Limited (GUVNL), told Mercom, “In the past, Gujarat used to buy wind power to fulfill its RPO, but now the recent wind auction conducted by the Solar Energy Corporation of India (SECI) &#8211; with wind tariffs falling as low as Rs.3.46 (~$0.051)/kWh &#8211; has changed the way the state views the wind sector. The tariff at which we are buying wind at present is much higher than the tariff quoted in the SECI auction. This led us to re-strategize and come up with the wind tender,” added the GM (IPP), GUVNL.</p>
<p><a href="https://mercomindia.com/ppas-1050-mw-wind-projects-signed/" target="_blank" rel="noopener">Power Purchase Agreements (PPAs)</a> for the capacity tendered in the first-wind auction were signed between PTC India, a power trading solution provider, and developers. While addressing the gathering at the PPAs signing ceremony, Mr. Piyush Goyal, Minister for Power said, “The Ministry is doing everything necessary to remove uncertainty regarding PPAs, and an example is this auction where PPAs have been signed way ahead of project completion.” The reverse auction is showing positive signs for the sector and better days are to come soon for wind in India.</p>
<blockquote><p>“Just two years ago, the wind sector was lagging with no growth and several wind project developers went into solar project development to diversify and tap into the growing solar market. Now, some of those companies may rethink their strategies as solar gets hypercompetitive and wind begins growing again,” said Raj Prabhu CEO of Mercom Capital Group.</p></blockquote>
<p>&nbsp;</p>
<p><em>Image Credits: By Leaflet (Own work) [CC <a href="http://creativecommons.org/licenses/by-sa/3.0" target="_blank" rel="noopener">BY-SA 3.0</a>], via Wikimedia Commons</em></p>
<p>&nbsp;</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/raj/" class="vcard author" rel="author"><span class="fn">Raj Prabhu</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><div class="designboxt">
<p><img class="alignleft" style="border-radius: 50%;height: 50px;margin-top: -4px;border: 1px solid #00b451" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Raj-New-200X200-1.jpg" width="50" /></p>
<p><strong style="text-decoration: underline">Raj Prabhu,</strong> Staff reporter at Mercom India<br />
<a href="https://mercomindia.com/author/raj/" target="_blank" rel="noopener">More articles from Raj Prabhu.</a></p>
</div>
<div class="authorboxn">
<img class="alignleft" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/Raj-New-200X200-1.jpg" alt="Raj" /><a href="https://mercomindia.com/author/raj/" target="_blank" rel="noopener"><strong style="color: #00b451">Raj Prabhu</strong></a> is a recognized thought leader in clean energy markets where his work has influenced policies worldwide. He has a deep understanding of regulatory policy and clean energy markets and his market and opinion pieces are regularly published on both MercomIndia.com and other leading publications globally. Raj is also a regular speaker and presenter on clean energy policy and finance topics at conferences worldwide. Raj attended the KLE College of Science in Bangalore, India for physics and chemistry, and holds a Bachelor of Science Degree in Hotel and Institutional Management from Johnson and Wales University, Rhode Island. <a href="https://mercomindia.com/author/raj/">More articles from Raj Prabhu.</a></div>
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