Wind prices refuse to rise

Belying all expectations, wind tariffs have remained obstinately low—Rs 2.44 a kWhr—at government of India’s third capacity auctions that were concluded on Tuesday.

Four companies won rights to put up wind projects and sign power purchase agreements with the government-owned SECI, quoting Rs 2.44 a kWhr. Two other winners quoted Rs 2.45. The winning tariff is, therefore, just a paise more than the winning tariff discovered in the 500 MW bid of the Gujarat utility, held in December.

Sprng Energy, backed by the PE firm, Actis, which made news when it won 197.5 MW in the Gujarat auctions in December, quoting Rs 2.43 a kWhr, quoted two paise more this time, and lost.

In December, every industry observer said the quoted tariff was irrational and was probably driven by the inventory of wind machines piled up with turbine manufacturers, such as Inox, Suzlon and Gamesa. It was said that in the next auctions, prices would firm up to at least around Rs 2.90.

This auction has proved them wrong. Commenting on the auctions, Ramesh Kymal, Chairman and Managing Director of Siemens Gamesa India, a wind turbine manufacturer, observed that the sites chosen by the winning bidders were, once again, the windy regions of Kutch, Gujarat and Tamil Nadu. Windmills here can work at 40 per cent plant load factor, which means a MW of capacity can potentially produce 3.5 lakh units of electricity a year.

“Also, some turbine manufacturers have backed wind energy companies quoting low, as they were anxious to get market share,” Kymal observed. Also, the wind energy companies (or, wind ‘independent power producers’) have a big appetite for putting up projects, he said, implying that the companies, being funded by private equity funds, are under pressure to show deployment of the funds.

Inox, a wind turbine manufacturer, also participated in the bidding, meaning it will double as an energy company. But typically, machine suppliers win projects, develop them and sell them off when they are legally permitted to do so.

Goldman Sachs backed ReNew Power Ventures and Green Infra Wind, which is part of the Sembcorp group of Singapore, are said to be backed by Suzlon, which means that they will most probably buy Suzlon’s turbines. Incidentally, Semborp has so far won 800 MW through the three auctions of SECI, the highest by any wind energy company.

Inox will use its own machines, while Torrent and Adani are also said to be inclined to buy Inox’s machines. Alfanar, a company headquartered in the Middle East, is said to be in talks with the German turbine manufacturer, Senvion.

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