Renewable energy

Good tidings: Wind is now India’s cheapest source of clean energy

The tariff is less than the lowest solar power tariff of Rs 2.44 per unit.

Get over the sunshine. Wind is now the cheapest source of renewable energy in India.

Auctions conducted in Gujarat on December 21 discovered a record low tariff of Rs 2.43 a unit. That is nearly 8% cheaper than the previous low of Rs 2.64 that the industry saw in October. This tariff is also less than the lowest solar power tariff of Rs 2.44 that the country recorded in May this year.

This new rate was quoted by Sprng Energy, a Pune-based renewables firm, which bid to set up a 197 megawatt wind farm in an auction held by the Gujarat Urja Vikas Nigam.

The crash in tariffs comes on the heels of a recent announcement by the Narendra Modi government that resurrected the Indian wind power market after nearly a year of stagnation. The power ministry announced a slew of guidelines for state electricity utilities that want to procure wind power from independent producers. The norms cleared the way for different state governments to hold wind farm auctions. This is besides those conducted by the central government-run Solar Energy Corporation of India.

With the market having suddenly revived, wind power producers and equipment manufacturers who were left without orders to execute are scrambling to participate in the auctions and win projects, driving down tariffs. “The problem is that if auctions are not enough in number, people desperately bid low to keep their facilities going,” Anish De, a partner at KPMG’s infrastructure and government services, said. “The moment the auctions are sufficient and they have to look at further investments, the prices start stabilising.”

Bottomed out

Analysts, however, do not see prices falling further. The current situation, they say, has been caused by windmill equipment manufacturers who have driven down prices. “My sense is that the wind power project development industry is still taking a little bit of haircut but not that much, but the main pressure is coming from the equipment supply industry,” De said.

Which way the tariffs will go from here depends on how much capacity the central government or various states bid out in the coming months. After the new guidelines were announced, states such asTamil Nadu, Andhra Pradesh and Rajasthan may announce auctions to allow power producers to set up wind farms. Analysts caution that for the industry to stabilise, prices should not fall further. Otherwise, it will hit profitability.

“In the long run projects definitely need to be viable,” Gautam Bafna, an analyst at CARE Ratings who tracks the renewables sector, said.

“These projects are bid out at lower IRR,” he added, referring to the internal rate of return. “Future projects may not continue on these rates. Ultimately there should be some parity.”

This article first appeared on Quartz.

Support our journalism by subscribing to Scroll+ here. We welcome your comments at letters@scroll.in.
Sponsored Content BY 

Get ready for an 80-hour shopping marathon

Here are some tips that’ll help you take the lead.

Starting 16th July at 4:00pm, Flipkart will be hosting its Big Shopping Days sale over 3 days (till 19th July). This mega online shopping event is just what a sale should be, promising not just the best discounts but also buying options such as no cost EMIs, buyback guarantee and product exchanges. A shopping festival this big, packed with deals that you can’t get yourself to refuse, can get overwhelming. So don’t worry, we’re here to tell you why Big Shopping Days is the only sale you need, with these helpful hints and highlights.

Samsung Galaxy On Nxt (64 GB)

A host of entertainment options, latest security features and a 13 MP rear camera that has mastered light come packed in sleek metal unibody. The sale offers an almost 40% discount on the price. Moreover, there is a buyback guarantee which is part of the deal.

Original price: Rs. 17,900

Big Shopping Days price: Rs. 10,900

Samsung 32 inches HD Ready LED TV

Another blockbuster deal in the sale catalogue is this audio and visual delight. Apart from a discount of 41%, the deal promises no-cost EMIs up to 12 months.

Original price: Rs. 28,890

Big Shopping Days price: Rs. 10,900

Intel Core I3 equipped laptops

These laptops will make a thoughtful college send-off gift or any gift for that matter. Since the festive season is around the corner, you might want to make use of this sale to bring your A-game to family festivities.

Original price: Rs. 25,590

Big Shopping Days price: Rs. 21,900

Fashion

If you’ve been planning a mid-year wardrobe refresh, Flipkart’s got you covered. The Big Shopping Days offer 50% to 80% discount on men’s clothing. You can pick from a host of top brands including Adidas and Wrangler.

With more sale hours, Flipkart’s Big Shopping Days sale ensures we can spend more time perusing and purchasing these deals. Apart from the above-mentioned products, you can expect up to 80% discount across categories including mobiles, appliances, electronics, fashion, beauty, home and furniture.

Features like blockbuster deals that are refreshed every 8 hours along with a price crash, rush hour deals from 4-6 PM on the starting day and first-time product discounts makes this a shopping experience that will have you exclaiming “Sale ho to aisi! (warna na ho)”

Set your reminders and mark your calendar, Flipkart’s Big Shopping Days starts 16th July, 4 PM and end on 19th July. To participate in 80 hours of shopping madness, click here.

Play

This article was produced by the Scroll marketing team on behalf of Flipkart and not by the Scroll editorial team.