Wind power prices crash to ₹2.43/unit in Gujarat auction

Price of wind power crashed to ₹2.43 a kWhr in tariff-based capacity auction of Gujarat's utility, Gujarat Urja Vikas Nigam Ltd (GUVNL). 

GUVNL has announced that a company called Sprng Energy Pvt Ltd has quoted that price, bidding for 197.5 MW of the 500-MW auctioned by GUVNL. 

Tariff-based auction of capacity, common in the solar segment, is fairly new for the wind industry.

Those who quote the least prices will get to sign power purchase agreements, whereupon they will put up the wind power plants and sell the power at the agreed price. 

Earlier, the price at which wind energy companies would sell the power to the utilities used to be fixed by the respective State's electricity regulatory commission, which would fix the tariff for a specified period, applicable for projects that come up within that period. 

This the third time in the country that wind power capacity is being auctioned. 

The first two wind auctions, for 1,000 MW each, were conducted by SECI, the renewable energy promoting company owned by the government. 

They concluded in February and October 2016, when the least tariffs were ₹3.46 and ₹2.64 a kWhr, respectively. 

The third auction is the first by any State. 

The tariff of ₹2.43 is lower than the record-low tariff of ₹2.44 discovered in solar capacity auctions, held by SECI, for projects to be set up in a solar park in Bhadla, Rajasthan. 

When wind prices fell to ₹2.64 a kWhr in the second auctions, most people in the industry felt that the wind tariffs had hit the bottom, and could only go up. The current auctions have proved them wrong. 

The low (and falling) tariffs mean that wind turbine manufacturers, such as Suzlon, Inox and Gamesa, will find their margins under pressure. 

On the flipside, the lower tariffs would help faster roll-out of wind projects as the country races towards the government-fixed target of 60 GW to be achieved by 2022.

 The current capacity in the country is 32,700 MW.