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Wind power producers oppose competitive bidding for projects

According to reports, the newly-formed Wind Independent Power Producers Association (WIPPA) has started off with two major campaign themes — opposing price discovery of wind power tariff through a competitive bidding route and moving the judiciary to enforce renewable purchase obligation.

WIPPA, which had been in the forming for several months now, was formally launched at Renergy 2013, a conference of the renewable energy industry organised here by the Tamilnadu Energy Development Agency (TEDA). WIPPA is an association of wind IPPs, or those companies whose main business is that of selling wind power-generated electricity, as opposed to entities who are in other businesses but also put up windmills, mostly for availing themselves of tax breaks.

The association was formed because the wind IPPs felt they needed a “separate voice” for themselves.

The other major industry associations in the Indian wind power sector are the Indian Wind Turbine Manufacturers’ Association, Indian Wind Power Association and Indian Wind Energy Association.

Speaking to Business Line on the sidelines of the conference, the President of WIPPA Sunil Jain, said that price discovery for electricity generated by windmills would kill the industry. Currently, wind power producers either sell electricity to the electricity distribution companies at tariffs fixed by the respective state electricity regulatory commissions, or sell it to consumers directly at negotiated rates.

Now, Rajasthan has come up with a ‘competitive bidding tender’. The State is asking interested parties put up 300 MW of fresh capacity in the State and sell the electricity generated by them at rates that would be determined by a competitive bidding process.

The industry fears that Rajasthan’s example would be followed by other States, notably Gujarat and Maharashtra.

Sunil Jain says that fixing tariff through competitive bidding is at least two years too early for the industry. The bidding process will lead to undercutting and result in very low prices, which will kill the industry. However, if authorities declare that competitive bidding would come after, say, two years, the IPPs will prepare themselves for it, he said.

There are ‘obligated entities’ (mainly electricity distribution companies and large consumers of power such as factories) who are mandated by law to buy a certain specified amount of green power, or purchase ‘renewable energy certificates’ from the market. This law is not being followed and the State regulatory commissions, who have to enforce the law, have not been doing so. As such, wind power companies are losing money.

WIPPA’s members have petitioned the Appellate Tribunal for Electricity to direct the regulatory commissions to enforce the ‘renewable purchase obligations,’ U.B. Reddy, Secretary, WIPPA, said.

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