First wind energy auction rules soon; 1,000-Mw may be commissioned in FY18

To ensure bidding for wind power projects does not face resistance in the states, the Ministry of New and Renewable Energy (MNRE) is acting fast on guidelines in this regard.

By sections 62 and 63 of the Electricity Act, states cannot call for bids of power projects if the Centre has not set a guideline. The MNRE has had two rounds of bidding, and Tamil Nadu for a state project, for 1,000 megawatt (Mw) each. A similar process in Gujarat has got stuck at the high court, where wind power developers have challenged the state’s move to call for bids without guidelines.
“It’s just a matter of weeks for the guidelines to be issued. We have finalised the draft, after consultations with the industry. We have forwarded it to the Ministry of Power and they’d issue it soon, as it in their legal purview,” said B P Yadav, joint secretary (wind), MNRE.
The guidelines would be the first to be issued for the segment since its inception two decades earlier. 
Competitive bidding was introduced via the first auction in February 2017, the rate falling to Rs 3.46 a unit. The sector worked under a ‘feed-in-tariff’ regime till then, which meant the power price would be in accordance with the project cost. 
That rule has been ended, to encourage competition and bring down prices. While 2,000 Mw has been bid out, the MNRE is expecting to award another 3,000 Mw by the end of this financial year (FY18). “Award of projects from the next year would depend on demand, which we are hopeful would be healthy,” said Yadav.
Capacity addition, however, has been slow. Of the targeted 4,000 Mw, only 354 Mw has been commissioned till yet, according to the data on the MNRE website. Government officials said the segment should see 1,000 Mw of commissioning by the end of 2017-18.  “It’s a minor hiccup due to change in regime (on rules). From the next financial year (FY19) onwards, wind power will have steady growth, as projects bid this year would come online,” said an official. The MNRE officials add that the government is looking at measures to improve wind power output — strict targets, regulations, and dialogue with the industry and states.
The guidelines, apart from establishing of procedure, would also be an overarching mission statement for the sector. The guidelines prescribe only bidding route for awarding wind power projects, by both the Centre and states. 
The MNRE would also sign an agreement with six states to improve the forecasting and scheduling services for wind power. “These are Gujarat, Madhya Pradesh, Maharashtra, Rajasthan, Karnataka, and Andhra Pradesh. Gujarat was already doing it but the government is looking to improve this, to maximise the wind power output. From the current variation level of plus/minus 15 per cent, we want to bring it down to plus/minus five per cent,” said an official.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel