JSW Energy, Adani Power, Ayana and Evergreen Renewables winners in 1.2 GW wind power bids

JSW Energy, Adani Power, Ayana Renewable and Evergreen Renewables have emerged winners in SECI’s pure wind energy auction for 1.2 gigawatt (GW) capacity in Karnataka. The auction discovered tariffs significantly below the reserve price, showing investor appetite; however, analysts warn that many of the successful bidders could find the tariff quoted unsustainable unless their borrowing costs are substantially cheaper.

The last pure wind capacity auction in the country was conducted 18 months ago.

According to sources, Adani Renewable Energy Holding Fifteen won 300 MW of the auctioned capacity, quoting the lowest tariff of Rs 2.77 per kWh, Ayana Renewable Power Six won 300 MW at Rs 2.78 per kWh, Evergreen Power Mauritius won 150 MW at Rs 2.78 per kWh, and JSW Energy got 450 MW at Rs 2.78 per kWh.

SECI had put the reserve price – bids above which are not entertained – at Rs 2.99 per kWh.

In the last over one year, the government has been keen on inviting bids for solar and hybrid (wind+solar at 8:2 ratio) power projects, while pure wind power projects haven’t received much attention. It is expected the auctions will bring the life back into the wind power industry that has been facing the double whammy of payment delays from discoms and Covid-19 related disruptions.

An industry expert on the condition of anonymity said, since the projects auctioned will come up in Karnataka, and given the wind speed and project costs in the region, any tariff in excess of Rs 3.10/kWh would be financially sustainable. “It is likely that the companies that quoted below Rs 2.80/kWh have arranged funds at much lower rates than the industry, and have far lower expectations in terms of IRR,” the expert said.

The wind power industry normally bids for projects with expectations of 15% return on investments. But at a tariff below Rs 2.80/kWh, returns are not expected to be much lower.

In the previous tranche the winning tariffs ranged between Rs 3.01/kWh and Rs 3.41/kWh.

A senior SECI official told FE that the government is trying to re-establish wind power in the system and these auctions, including the hybrid projects, have helped to break the cartel and reduce the price. “We believe the tariffs quoted for the Karnataka projects are all sustainable as the winners average out lower returns with higher tariffs won at other locations. There are developers who are regularly participating and winning in most of the auctions. This is the best way to uniformly spread the wind power across India. If Gujarat has a capacity utilisation factor (CUF) of 37, then Karnataka is around 36, which is equally good,” the SECI official said.

CUF is the measure of total wind power potential in the region. If CUF is higher than 35, it means the region has potential of 57 GW.

The bidders who failed to make the cut in the latest auction are Azure Power who bid for 300 MW at Rs 2.79/kWh, O2 Power SG for 300 MW at Rs 2.80 kWh, Sirdi Sai Electricals for 300 MW at Rs 2.84/ kWh, AMP Energy for 150 MW at Rs 2.88/kWh, Tunga Renewable for 150 MW at Rs 3.04/kWh, ReNew Vyan Shakti for 300MW at Rs 3.28/kWh, and Halvad Renewables for 300MW at Rs 3.39/kWh.