India wins deal for 24X7 supply of green power

The gloom and doom of the coronavirus pandemic has failed to dampen the spirit of India’s renewables sector, with Goldman Sachs-funded ReNew Power on Friday winning the world’s first tender for round-the-clock supply of green power by a margin of 1 paise by quoting a tariff of ₹2.90 per unit, or roughly 4 cents.

At today’s exchange rate of ₹75.55 to a dollar, ReNew’s offer is just 1 cent above the 3.5 cents, or ₹2.44 per, unit discovered in May 2017 in Rajasthan’s Badhla solar park, which had stirred up the solar power market as the lowest in the world. It is also 124 per cent cheaper than the peak tariff discovered discovered in a February auction of renewable capacity with storage option, which also gave the assurance of continuous supply but was an expensive proposition when compared to coal-fired power.

Compared to coal-fired power, Friday’s winning tariff, discovered through the reverse bidding process in state-run SECI’s auction for 400 MW capacity, is 35 per cent cheaper than state-run NTPC’s average tariff for coal-fired power. The offer works out between 25 per cent and 72 per cent cheaper than ₹6 per unit or so discoms pay to buy power from the open market or peaking sources, mostly gas-fired plants, to meet demand.

The photo-finish indicates the intensity of competition and the sector’s resilience to the economic impact of pandemic. The reverse auction saw tariffs drop 19 per cent from the lowest opening bid of ₹3.59 per unit. Greenko bowed out at ₹2.91 per unit. Ayana and HES Infra were the two other bidders.

At this tariff, the auction spells trouble for coal-fired plants, seen as the primary source of dependable power, by removing the barrier of intermittency associated with green power and addressing the affordability issue of solar-storage systems. The tender stipulates 24X7 supply of only green power, though a mix renewables – solar, wind, solar-storage or hydel – is allowed.

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