Karnataka mulls competitive bidding for wind power

After the success of the recent central government-sponsored auction of wind power capacity, Karnataka is looking to do the same.

Wind power companies have always sold energy at rates fixed by the respective State electricity regulatory commissions, and these feed-in tariffs have ruled around ₹4.50 a kWhr.

Tamil Nadu, the windiest state, pays ₹4.16 a kWhr.However, in the country’s first tariff-based auctions, held last month, the market-determined tariffs slid to as low as ₹3.46 a kWhr.

This has come as an eye-opener to State governments, who now see an opportunity in competitive bidding to procure power cheaper.

Karnataka’s Energy Minister DK Shivakumar told BusinessLine on the sidelines of the inauguration of Tata Power Solar’s expanded facilities in Bengaluru, that the State is working on a plan to auction wind capacity.

Shivakumar ruled out opening signed power purchase agreements for re-negotiations. “We can’t do that,” he said, but observed that feed-in tariffs would “have a natural death.”

He said the State wanted to make sure that the transmission infrastructure was in place before coming out with a tariff-based competitive bidding tender (in which the bidder who agrees to sell power at the cheapest prices would get contracts to put up wind power projects and sell energy for 20-25 years.) Asked if Karnataka would come out with the competitive bidding tender in a year, Shivakumar said, “more or less.”

It is understood that Rajasthan is also mulling competitive bidding for wind. The prospect of prices dropping as a consequence of competitive bidding was just what the wind turbine manufacturers feared, because the low tariffs would put pressure on the selling prices of their turbines.

Meanwhile, Karnataka is rolling out a taluk-wise solar power capacity plan, under which each taluk would get 20 MW of capacity. Already 100 taluks have been allotted capacities and 40 more will be given soon.

The Minister stressed preference would be given to those who buy solar modules made in Karnataka.

Tata Power Solar, a subsidiary of Tata Power, has a large plant in Bengaluru that makes solar cells and modules. Shivakumar, on Tuesday, formally inaugurated the expanded facility of the plant. The ₹100-crore expansion not only double the company’s module making capacity to 400 MW, but also will make it the largest in the country. It will also increase the cell capacity by 65 per cent to 300 MW.