Good For Nature Bad For Pocket: Wind Energy To Potentially Become Expensive Due To Transmission Costs

The concerns of developers over higher cost of transmission has resulted in the escalation of wind power tariffs in the latest auction of 1,200 MW of projects, Economic Times has reported.

Rs 2.60-2.77 per unit were the winning tariffs in the auction held by the Solar Energy Corporation of India while lowest tariffs in April auction were Rs 2.51-2.52 per unit.

Placing a bid of Rs 2.76, Adani Green Energy won 300 MW with Torrent power getting 115 MW at the same price. Riyadh based Alfanar and Sitac RE bagged 300 MW at a price of Rs 2.77 per unit. Renew Power and Ecoren Energy too got 10 MW and 175 MW at Rs 2.77 per unit.

The upward jump in the tariff shows the concerns of the developers regarding lack of transmission facilities. Developers are wary of the limited number of locations with high wind speed capable of generating wind energy as well as the limited number of transmission substations being operated by Power Grid Corporation of India (PGCIL). Another concern is the upgradation of transmission facilities which at present may not be able to carry additional power.

“There are not that many sites still available that are close to PGCIL substations, Locating projects at some distance from substations increases transmission costs and hence the higher tariff.” a wind developer told ET.

Banks, too, have suggested developers not make “crazy assumptions” while bidding for the project.

“Developers have been getting feedback from banks telling them bluntly that they had made crazy assumptions in their eagerness to lower tariffs and win projects and financial closure will not be possible at the prices they had committed,” said the developer.