Several Indian States Look To Abandon Wind Feed-in Tariffs After Successful Auction (MIDTERM Topic - 1)

[Arslan Ijaz]

https://cleantechnica.com/2017/04/24/several-indian-states-look-abandon-wind-feed-tariffs-successful-auction/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IM-cleantechnica+%28CleanTechnica%29

[Arslan Ijaz]

It is bad for the wind energy power developing companies that a lower tariff was discovered in the auction organized by SECI. If we look at the states, they will definitely look for something cheaper. Especially in the states of Gujrat and Andhra Pradesh where wind energy is more than some of the other states. They are comparing themselves with those states and coming to a conclusion that even after having more wind energy why should they pay more than those states. Their point is valid, but if we look at the power developing companies, once a tariff has been decided then based on that number all the rest of the calculation is being done. Those companies have to keep their margin as well, they must have calculated everything based on the tariff decided before. But now if they have to bring the tariff number down then it will be a loss for them. So I guess Government should make their plans before hand to avoid such kind of confusion and problems in the future. Auction organized by SECI could be done before to avoid this problem. 

[Martinez, Alfred S.]

Arslan, being unfamiliar with these companies and regions I was unaware about what was really going on here. From your post, it sounds as if the power developers made sort of manipulative with their apprehension to sign the PPAs.

My initial post was:

It’s great to see several states to show solidarity and decline to sign power purchase agreements (PPAs) that they felt were unjust. This is how things have to be done sometimes in order to show that one means business; it’s a great negotiation tactic. Through competitive auctions, wind energy capacities in the region will surely increase.

However, based on your take it seems that the government had a mishap and these developers took advantage of that. I completely misunderstood.

[Arslan Ijaz]

Alfred, on these tenders and contracts there is always a lot of politics involved. Those power developing companies were promised before that the upcoming tariff would be higher than their tariff (6.5 - 7.5 cent/kWh). So they went ahead and installed 500 MW of wind energy project. But now the reverse happened, in the latest auction the tariff dropped to 5.4 cent/kWh. It created all of this confusion and put 500 MW projects at risk.

[Dobhal, Shivani]

From what I understand, the Indian SECI is doing a good job in offering the solar and wind power procurement in the form of competitive auctions. Instead of relying on higher rate feed-in tariff mechanism by regulatory bodies, states in India could now rely on uniform tariffs established by the government throughout the country. However, like Arslan noted, this could mean significant losses to the power generating companies as all costs of production, installation and other formalities are already calculated based on the previous higher rates. Their should be a more structured, more regulated way to fix a tariff rate and I think these competitive auctions, if adopted by the state government would prove to be extremely beneficial. I think the state government should intervene and find middle ground so as to not leave the 500 MW energy capacity stranded due to non-compliance by these power generating companies. 

Also, I think it's right to determine the tariff rates irrespective of a state's wind energy production capacity, since the states that do not have big wind energy producing capacity should not be penalized or pay heavier prices in their bids to use renewable sources of energy. 

[Chun S]

The goal of feed-in tariffs is to offer cost-based compensation to renewable energy producers, providing price certainty and long-term contracts that help finance renewable energy investments. The higher feed-in tariffs indicate the higher system costs or lower capacity factor so that the government will have to subsidies the producers more. And this will affect the wiliness of installing wind turbines as well as the competitiveness of the local business, so it is understandable that the state government rejected to sign fresh power purchase agreements.

[Wojciech Trawinski]

Indecisiveness in such a matter will lead to the stalling of green energy distribution. This is important in a developing nation such as India for a few reasons, but primarily is the concern of reducing the carbon footprint. Air quality in certain parts of India can be considered less than average because of smog and high levels of carbon dioxide. This poses health risk and in areas of increased density lowers the standard of living. it is disheartening knowing that green solutions exist, but capitalism prevents them from being implemented. 

[Martinez, Alfred S.]

Arslan: As with many other technological and environmental issues, these matters are political I suppose. These issues are more intricate and delicate than originally thought.

Wojciech: Postponement of such an issue can be quite detrimental to a nation such as India. Thankfully, the delay was not long and didn't have a negative environmental impact - at least it wasn't mentioned in the article.