The Indian Wind Farm association has come out strongly against a new wind energy policy in Rajasthan. The policy states that 300 MW of wind energy capacity would be allocated based on a reverse auction. This is similar to the policy under which India’s federal solar energy subsidy policy operates. The policy is a good one since it prevents the renewable energy developers from making a windfall as equipment prices typically fall more than the feed in tariffs.
Fixed FITs have been troublesome as many countries in Europe like Germany, Italy, Czech have faced massive solar booms due to lucrative subsidies. Due to the in-sustainability of these programs which are funded by taxpayers, these booms inevitably give way to busts. This leads to more problems as developers sue the government which in turn files new taxes and levies on renewable energy. Reverse auctions on the other hand try to discover the true price of green energy like wind and solar power. For poor countries like India which cannot afford huge subsidies, this is perhaps the best policy. Wind farm developers do not like this policy as it will reduce their profits and make them compete with each other.
The wind industry is in ICU, says Ramesh Kymal, one of the doyens of the industry and Chairman of the Indian Wind Turbine Manufacturers’ Association. He says he will not countenance any move to bring in a ‘competitive bidding’ regime.
The provocation for this statement was the recent Wind Policy of Rajasthan that seeks to procure wind power from 300 MW of fresh capacity, the tariff for which will be determined by a process of competitive bidding.
Rajasthan has put out a ‘request for proposal,’ under which a developer can put up wind projects anywhere in the State and sell the power to Rajasthan Renewable Energy Corporation at rates determined by the bidding process.
The wind industry has, for long, been opposing tariff determination by a competitive process, saying that while, in principle, the policy is fine, the time for such a move is not opportune. It will sound the death-knell for the industry, says Kymal, pointing to a number of “variables” — unlike in the case of conventional power — such as uncertain generation, poor transmission system, power producers not being paid on time and the burden of cross-subsidy charges.