Economy

Wind power: State govts to decide on tariff from smaller projects

Our Bureau New Delhi | Updated on January 09, 2018

Wind power procurement guidelines aim to enable the distribution licensees to procure wind power at competitive rates in a cost-effective manner.

It took almost a year for the Centre to standardise the bidding process for wind energy projects by state governments. The guidelines issued by the Power Ministry aims to enable the distribution licensees to procure wind power at competitive rates in a cost-effective manner.

According to an official statement, the guidelines are applicable for procurement of wind power from grid-connected projects having an individual size of 5 MW and above at one site with minimum bid capacity of 25 MW for intra-State projects. Projects with an individual size of 50 MW and above at one site with minimum bid capacity of 50 MW for inter-State projects will also be covered by them.

An official statement said the guidelines have been issued under Section 63 of the Electricity Act, 2003.

The guidelines follow petitions against the auction of wind power by Tamil Nadu and Gujarat Governments. “The petitions now stand void as the Centre has issued these guidelines,” Chairman of Indian Wind Power Association, K Kasturirangan, told BusinessLine.

“The Centre’s guidelines leave room for the State governments to decide on the mechanism for deciding tariff from smaller projects. A feed-in-tariff can be adopted for them,” Kasturirangan said adding, “While the auctions in Tamil Nadu have closed, it is yet to be seen if the guidelines followed by the Gujarat Government are in consonance with the Centre’s guidelines. If not, the State will have to reissue them.”

In a petition filed in October in the Gujarat High Court, the Indian Wind Energy Association had alleged: “The entire process of bidding is in contravention of Section 63 read with Section 86(1)(b) of the Electricity Act, 2003. It is submitted that in the absence of any guidelines by the Central government, the bidding process cannot continue.” The court had then put the auction of 500 MW of wind energy by the Gujarat government on hold. But by November, the court cleared the decks and allowed the auction to go ahead.

A similar situation had come about in Tamil Nadu where a petition was filed in the Madras High Court during the same time. But, the court did not intervene and the industry subsequently withdrew its petition.

The payment security approved in the new bidding guidelines has not been seen in power purchase agreements (PPAs) signed by the state distribution utilities (discoms) with wind power developers in the past, according to Senior Vice-President and Group Head, ICRA Ratings, Sabyasachi Majumdar. He said, “This along with the measures on compensation for grid curtailment and termination payments, if implemented, is favourable for the wind power developers and improves the bankability of the PPA document.”

Published on December 12, 2017

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