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Indian Wind Energy Prices Expected To Show A Sharp Decrease As Competition Finally Arrives

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Reverse Auction in Indian Wind Industry

The Indian wind energy sector has been a cosy sheltered place for all its major stakeholders as the government provides a fixed prices for the wind power it buys without subjecting it to competition. The price called feed in tariffs varies for different states but it is high enough to allow all major players to earn a high return of equity of more than 20%. The wind turbine companies such as Suzlon, Inox and others have prospered over the years from this subsidy regime as have the new independent power producers such as Renew Power, Mytrah and others. The wind turbine companies have also prevented foreign companies from entering the 4th largest market in the world by using a certifying agency to block the free flow of wind equipment in the country.

Read List of Wind Energy Companies in India.

However, the whole regime in the wind industry in India is set to change with the new nationwide reverse auction tender that is set to be announced by the government. This new 1 GW tender will lead to all major players bidding for winning capacity that will be set up. It will allow only the most efficient companies in India to set up capacities in the country and remove the rents that the wind companies were getting at the expense of the Indian consumers. The strong lobby of wind energy companies and IPPs had prevented competition in the sector by using their strong connects with the government as well as going to the courts to block any changes to the subsidy regime.

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India had shown strong growth in the wind energy sector by giving tax breaks earlier which had led to all sorts of companies and individuals (even Bollywood celebrities) to use wind farms as instruments of tax saving (or legalized evasion). This has greatly benefited companies such as Suzlon who used to provide turnkey solutions for companies to benefit from this subsidy regime. Though the GBI later allowed specialized power producers to enter the sector, this cosy game of making tons of money without competition continued.

It is expected that wind power prices will fall to INR 4/kWh from an average of around INR 5/kWh due to competition. The Indian government has realized the shenanigans of the Indian wind companies as they have also recently stopped the Indian certifying company from blocking wind turbine products from foreign players. These new polices are extremely good for Indian consumers as they will allow much lower prices for wind energy and stop the rent seeking behavior of Indian wind players.

Wind tariff is likely to come in between Rs 4 and Rs 4.5 per unit — below the average of around Rs 5 — in the auction being conducted by SECI to set up 1,000 MW capacities for supply of power to non-windy states. The state-run Solar Energy Corporation of India (SECI) is likely to complete the bidding of the wind projects by the month end.

Source

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

One Response so far | Have Your Say!

  1. Engr. Moses Elekula

    To me, whether it is solar power, or wind power, both have a not so brilliant future as both are potentially susceptible to the looming climate changes effects which may remain effective even in the years ahead.
    Engr. Moses Elekula f,Ampere Engineering Ltd., Nigeria.