Wind tariff holds its ground

The latest wind energy auctions which were conducted by SECI saw wind energy tariifs hold its ground at Rs 2.44 as against the lowest bid recorded of Rs 2.43 at a sale conducted by Gujarat’s Urja Vikas Nigam Ltd. This came as a relief for the wind industry as the tariffs did not fall further.

It is to be noted that tariffs in the wind energy sector has been falling at a steep rate mainly due to advent of newer technologies leading to higher PLFs. However off late there has been a double whammy as the government moved from FiT regime (wherein a fixed tariff rate was paid by government to participating players) to reverse bidding auction (In the reverse bidding, the participating players have to tender their offer to the government). This lead to cut throat competition among the players leading to fall in their IRRs from 20-25% to 14-15%.

With new tariffs not slipping further, industry has seen a sigh of relief. However, how the future auctions pan out needs to be seen to conclude whether the industry has finally bottomed out or not?

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