Following a sharp correction tariff rates for wind energy projects in the first-ever competitive auction in India in February several states have refused to sign fresh power purchase agreements at higher feed-in tariffs.
According to media reports, states of Gujarat and Andhra Pradesh have declined to sign any fresh power purchase agreements with wind energy project developers. The power distribution companies in these states have expressed reluctance to the respective regulatory bodies in signing PPAs at feed-in tariffs higher than the recently discovered tariffs.
A total capacity of 500 megawatts is now reportedly stranded due to the unwillingness of power distribution companies to enter into PPAs.
The feed-in tariffs in FY2016-17 for Andhra Pradesh was Rs 4.84/kWh (7.5¢/kWh) and for Gujarat was Rs 4.19/kWh (6.5¢/kWh). The tariff discovered in the first-ever auction organised by the Solar Energy Corporation of India (SECI) was Rs 3.46/kWh (5.4¢/kWh). States determine their own feed-in tariffs but the tariff discovered in the auction shall be uniform across the country, irrespective of the wind energy potential of states.
Four companies – Mytrah Energy, Green Infra (owned by Sembcorp), Inox Wind and Ostro Energy were awarded 250 megawatts capacity each while Adani Green Energy secured rights to develop 50 megawatts capacity.
The Indian government is expected to launch similar auctions in the future and state governments may also adopt the route of competitive auctions to increase wind energy capacity instead of relying on feed-in tariff mechanism.
The Gujarat Electricity Regulatory Commission has already directed the power distribution companies to procure wind and solar power through competitive auctions only. The feed-in tariffs determined by the regulator shall act at ceiling price in the auctions.