Relief for smaller wind power projects as feed-in tariffs to stay

| Updated on: Jan 10, 2018


The crash in wind tariffs has hit smaller players

Coming to the aid of small wind power players, the Centre proposes to continue with the feed-in-tariffs (FIT) mechanism for such producers.

Last year, when the government went in for auctioning of wind projects, it moved away from the feed-in-tariffs concept. However, with tariffs reaching a low of ₹2.43 a unit, players with low capacity were finding the going tough.

Seeking redressal, the industry had not only approached the Minister for New and Renewable Energy but also knocked on the doors of the Prime Minister’s Office.

“The Secretary, Ministry of New and Renewable Energy, had held a meeting with with industry players on January 2,” K Kasthurirangaian, Chairman of the Indian Wind Power Association, told BusinessLine .

“At the meeting it was decided that wind energy projects of less than 25 MW will be allowed to operate under the feed-in-tariff regime. The Secretary said that he would write to State governments to enable the same. The existing rates for feed-in-tariffs are expected to continue,” Kasthurirangaian added.

Tariff decline

Wind energy tariffs had crashed with the introduction of reverse auctions for the award of wind energy projects.

Tariffs fell further to ₹2.43 a unit in December 2017 for the auction of a 500 MW wind power generation project in Gujarat.

Girishkumar Kadam, Sector Head and Vice-President, ICRA Ratings, had said: “The viability of such tariffs remains a challenge and it would depend up on the availability of long-tenure debt at cost competitive rates, capital cost, plant load factor level and the ability of the developer to identity locations with high generation potential.”

A wind energy player said “smaller players cannot operate with such low tariffs and subsequently lower margins. State governments are now shying away from awarding projects under the FIT regime. The Centre must push States to ensure that smaller projects get the fixed rate.”

This view has found favour with the Central government.

According to an MNRE official, “The guidelines for tariff based competitive bidding for procurement of power from Grid Connected Wind Power Projects specify that all projects above 25 MW will be auctioned. It has not been specified how the smaller projects will be awarded. We believe that the feed-in-tariff approach can continue there.”

Published on January 10, 2018
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