Rs 2.90 kWh Bid By Renew Power Lays Marker For Renewable Growth in India

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At Rs 2.90kWh Renew Power’s winning bid for the supply of round the click (RTC) power supply is a glimpse into the future, right now. The bid and its eventual execution over the coming two years will  go a long way to dispel the last doubts on the need for, and feasibility of a much higher renewable energy target for India’s power grid. In fact, it might yet make a case for an even more ambitious pathway to a ‘green grid’, where the country has set itself a target of 40 percent capacity from Renewable power by 2030, as one of its key NDC (Nationally Determined Contribution) goals.

Conducted by Solar Energy Corporation of India Ltd.(SECI), Renew Power came out winner after a closely fought auction which saw the lowest tariff drop by 69 paise over the course of almost 3 hours.

Complementing SECI for this effort Shri R. K. Singh, the Union Minister of State (IC), Power and New & Renewable Energy & Minister of State, Skill Development and Entrepreneurship, said in a tweet last evening, “Golden chapter added in Indian Renewable Energy story, as e-RA for 400 MW RE Projects with Round the Clock (RTC) supply conducted by SECI Ltd results in historic 1st year tariff of Rs.2.90/kWh. MNRE makes a new beginning towards firm, schedulable & affordable RTC supply through 100% RE power.”

The tender for 400 MW capacity had received a strong participation, with 4 bidders submitting their bids for a total capacity of 950 MW. 3 out of the 4 bidders, namely M/s ReNew Solar Power Pvt. Ltd., M/s Greenko Energies Pvt. Ltd and M/ HES Infra Pvt  Ltd. were finally shortlisted for the e-Reverse Auction. M/s Ayana Renewable Power Pvt. Ltd. was the fourth bidder. Power from this project is targeted to be sold to the NDMC and Daman & Diu and Dadra & Nagar Haveli, with each entity off taking a capacity of 200 MW. There was no ceiling tariff for the Projects, and the developers are free to set up the project on a Pan-India basis. The projects under this tender will be set up under the Build-Own-Operate model.

What makes the tariff a historic one, is the provision for  Round the Clock energy supply from 100% RE based energy generation sources, such as wind and solar PV, combined with storage. The developer will be provided a maximum time period of 24 months from the Effective Date of PPA. The first year tariff shall be escalated @3% on an annual basis, up to the 15th year of the 25-year Term of the PPA. As a result, the effective tariff for the said Project amounts to Rs.3.59/kWh. Compared to the tariffs witnessed in conventional sources of generation, this tariff offers a much better proposition for the Disocms to meet their energy demand through 100% RE supply.

Delighted to have contributed to this historic moment in Indian RE! @ReNew_Power is delighted to have won this 400 MW RTC bid. Thank you @RajKSinghIndia @SECI_Ltd for this terrific bid and opportunity https://t.co/7JQz7RIbki

— Sumant Sinha (@sumant_sinha) May 8, 2020

Sumant Sinha, Chairman and Managing Director at Renew power, also tweeted his delight at winning the tender.

As per the bid conditions, the developer is mandated to fulfill an annual minimum CUF (Capacity Utilisation Factor) requirement of 80%, and a monthly CUF requirement of 70%. Failure to achieve the above requirements in terms of the PPA, would result in removal of tariff escalation in the subsequent year (s), until the above requirements are achieved in a particular year. In terms of the above requirements, the tender therefore achieves a major milestone towards the MNRE’s and SECI’s efforts in realizing a firm, assured schedulable RE power supply model, which may inevitably, replace a conventional project, at a more viable tariff.

For India’s thermal sector, as well as state discoms, the latest results will come as a rude jolt to their complacency about the limits of renewable power, where grid stability due to its intermittent nature has regularly been cited as a reason to temper expectations. While details on the technology Renew Power is likely to op for for its storage requirements are yet to come in, the fact that it has quoted so low points to the possibility of some sort of pump storage option here. Unless it is counting on a fall in battery storage costs  as the project moves ahead. The surprising thing about the price here is the almost 50 percent drop this auction has seen over the previous renewable+storage tender for 1200 MW in March this year, which again had seen surprisingly low bids.

With the new electricity act coming up with stringent RPO conditions (Renewable Purchase Obligations), it seems safe to assume that cities across India especially should be the first to start the move towards higher renewable power from such RTC structured deals. Big private discoms like Adani Electricity Mumbai  Limited , which have struggled to get approvals for tariffs at higher rates, will also come under some pressure hopefully to move faster and for larger RE procurement soon.