Despite a 30% cut in wind energy tariffs in India over a period of just 10 months, Siemens Gamesa India CEO expects the trend to reverse in the coming months.
Siemens Gamesa India CEO Ramesh Kymal recently said an interview that the current wind energy tariff bids in India are unsustainable and he expects an uptick in the bids submitted by developers as turbine manufacturers push them to take a more realistic view of the market.
India’s first-ever wind energy auction saw tariffs of Rs 3.46/kWh (¢5.20/kWh), which were much lower than the feed-in tariffs being offered by several state governments. The decline in tariff bids intensified as subsequent auctions in the state of Tamil Nadu and the second national-level auction yielded bids of Rs 3.42/kWh (¢5.40/kWh) and Rs 2.64/kWh (¢4.20/kWh).
The most recent auction in the state of Gujarat saw tariff bids falling to the lowest-ever of Rs 2.43/kWh (¢3.80/kWh). This tariff is lower than the current lowest solar power tariff in the country. There were several contributing factors responsible for such a rapid collapse in wind energy tariffs. Kymal says some of those will no longer be applicable in the upcoming auctions.
As states decided not to sign any new power purchase agreements with wind energy developers under the feed-in tariff schemes, the developers grew increasingly desperate. With new fresh orders, this desperation spread to turbine manufacturers as well, which were unable to clear out their inventories. Kymal says this situation is expected to improve as turbine manufacturers communicate to the developers that these tariffs are unsustainable, leading to more pragmatic tariff bids.
While Kymal does not mention this specifically, another major development in recent weeks could also result in some easing in tariff bids. The central government has announced a timeline to auction 20 gigawatts of wind energy capacity by March 2020.
There are various factors indicating bid movements in both directions, hence upcoming wind energy auctions would be very interesting.