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Tangedco to procure wind power through reverse auction

According to reports, the Tamil Nadu Generation and Distribution Company Limited (Tangedco) plans to procure 500 MW of wind power through reverse auction with a benchmark rate of Rs. 3.46 per unit.

The State utility has filed a petition before the Tamil Nadu Electricity Regulatory Commission seeking a nod for the reverse auction. The plan is to procure 500 MW from wind power projects that have a minimum capacity of 25 MW.

If the plan comes through, Tamil Nadu would be the first State in the country to try reverse auction for wind projects when compared to the prevailing system of feed-in tariff that uses long-term agreements and pricing tied to cost of power production. In reverse auction, the tender process is adopted so the utility pays the minimum price for the power.

In Tamil Nadu, wind tariff is already the lowest in the country at Rs. 4.16 per unit. It is set to fall further with the benchmark tariff fixed at Rs. 3.46 per unit for the tender. The plan for reverse auction for wind energy was first launched by the Centre.

Solar Energy Corporation of India Ltd, a unit of Ministry of New and Renewable Energy, rolled out auction for procurement of 1,000 MW of wind power for supply to non-windy states. The auction was oversubscribed and the tariff hit a low of Rs. 3.46 per unit.

“The 2016 government of India tariff policy says all renewable power except municipal solid waste must be procured only through tendering. We are following that policy,” said a Tangedco official.

“Given the success of recent auctions, all states will increasingly look to procure both wind and solar through auctions,” Vinay Rustagi, managing director at consultancy firm Bridge to India, said. However, he also noted it is important to understand the crucial differences in different procurement schemes and structure the tenders properly. “The state boasts of the highest wind capacity in India, but Tangedco remains weak financially. There is significant grid curtailment for both wind and solar projects plus payments to developers have been delayed by as much as 12 months,” he added.

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