Thus, the discoms are now driving the next stage of auctions by having ‘demand-driven’ tender design rather than being focused on capacity.Īuction designs have also evolved in India to allow co-located wind and solar projects to encourage higher use of transmission assets and reduce intermittency. At the same time, the discoms are being pushed by the regulators to procure more clean energy to meet the renewable purchase obligations. Load balancing is becoming more difficult for discoms as the share of intermittent renewables has increased rapidly in the last five years. This was necessary at a time when renewables were priced higher than thermal power and they were not seen as a mature technology. The responsibility of balancing the intermittency of renewable output was left to the grid operators and the offtaker electricity distribution companies (discoms). Renewables have priority dispatch and hence there has been no need for them to regulate power generation. The technology is defined clearly in the tender but there are no requirements to supply power within specified hours of the day.
Stand-alone wind and solar auctions have been the norm for renewables in India. This threatens the future of the coal fleet. The offtakers may call for more tenders for firm renewables as the tariffs help them lower their average power procurement cost. However, the Solar Energy Corporation of India later acknowledged that since renewables are accorded ‘must-run’ status and there is no control over the generation, the offtaker must procure all power as scheduled by the IPP, with the only exception being curtailment for ensuring grid security. In the original tender, the buyer had the choice of not accepting the IPPs daily power output if it did not match the daily demand pattern. The offtakers will still need to purchase power from their contracted thermal power plants or the power exchange to meet their remaining power needs. As a result it is gaining early experience of developing such challenging projects and will benefit if such tenders become mainstream. ReNew has won auctions for peak power renewables, floating solar and now RTC renewables. Top IPPs are taking the lead to develop the newer types of renewable projects in order to distinguish themselves from competitors. They will continue to remain price sensitive and will not accept tariffs higher than their current cost of power purchase.
The electricity distribution companies – the key offtakers – are pushing for these newer types of tender that match their demand profiles more closely and shift the responsibility of balancing intermittent renewables onto the independent power producers (IPPs). The choice of long- or short-term storage and its size will depend on the generation profiles at chosen sites and ReNew’s assessment of additional capex versus penalty for shortfall in power output. We expect the project to be oversized and be spread across multiple sites to meet the required 80% annual capacity factor. The project can use a combination of any renewable power and energy storage technologies, although the latter is not mandatory. Greenko Energies, HES Infra and Ayana Renewables were the other bidders in this auction where submitted bids totaled 950MW. The resulting first-year tariff was 2,900 rupees ($38.85)/MWh, which rises 3% every year for 15 years and then remains constant for the next 10 years. of India’s auction for 400MW of ‘round-the-clock’ (RTC) renewables.
Renew Power (backed by Goldman Sachs) emerged as the winner in Solar Energy Corp. With the tariff lower than the power offtakers’ average cost of electricity purchase, it lowers the attractiveness of coal power. India completed its first competitive auction for ‘round-the-clock’ renewable power on May 8, 2020, with the winning project to use a mix of wind, solar and energy storage.
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