Govt weighs reverse auction vs conventional bidding for renewable projects

Move follows industry call to stop reverse e-bidding in order to keep tariffs at healthy levels

The Indian government is examining a proposal by the industry for stopping reverse auction held through e-bidding to award projects and move to conventional closed bidding. Anand Kumar, secretary, ministry of new and renewable energy (MNRE) said there has been an issue regarding the reverse auction. 

“There are various pros and cons to it. We are currently examining the reverse auction vis-à-vis the conventional bidding and the e-bid. Both are transparent. There has been a demand for the conventional transparent bidding and we are trying to find out from the experts which is the better,” he said at the Global Wind Day on Saturday. An e-bid is held on electronic platform with every bid visible to all players, while the closed bid is submitted physically in sealed envelope.

Industry representatives from both solar and wind power had earlier approached the government including the PMO to look into e-reverse bidding and the rapid fall in tariffs, said a source privy to the matter. In the representation, the industry said the tariffs have stabilised now and any further open bidding would lead to competitiveness beyond a healthy return. Industry executives had urged the government to no longer award projects through an open bidding and rather have closed bidding.

“We are not shifting from one regime to another. Whatever decision is taken, it will be on merit. We haven’t taken any decision. We are evaluating merit. Decision would be made by the competent authority,” said Kumar.

While open bidding has been prevalent in the solar sector since its inception in 2010 for projects awarded by the Centre, it was introduced in the wind sector only last year. For the past two decades, wind projects were awarded through feed-in-tariff mode i.e. power rate decided by the State Electricity Regulator.

At the same event, Tulsi Tanti, chairman, Suzlon Group, said that with the advent of bidding regime, there is clear visibility of volumes for next five years. “The exponential volume growth of 12-15 Gw per annum expected creates economies of scale and thereby offsets the concerns of low tariffs. It is a win-win situation. However, we need to create a level playing field for SMEs specifically to take part in the wind energy programme,” he said.

Financial year 2016-17 (FY17) saw wind power capacity addition of over 5,000 Mw, the highest ever in India during a single year and exceeding the target by 38 per cent, said Indian Wind Turbine Association (IWTMA). The Centre has already awarded 7,500 Mw and another 11,500 Mw is in the pipeline. Further 10,000 Mw each will be rolled out in FY19 and FY20. In solar, the capacity addition currently stands at 20,000 Mw. 

As the government is confident that it will meet its target of 175 Gw of clean energy capacity (100 Gw solar and 80 Gw wind) in next two years, it has now decided to set up 225 Gw by 2022.