According to media reports, Tamil Nadu will issue tenders of 1.5 gigawatts each for solar and wind energy in a few days. The state utility Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has been actively looking to increase renewable energy capacity in its power mix as the tariff bids for solar and wind energy projects have collapsed sharply over the last few months across the country.
TANGEDCO is likely to set upper limits for tariff bids that developers can submit in the auctions. For wind energy, the maximum permissible bid would likely by Rs 2.65/kWh (4.07¢/kWh) while for the solar power projects it would be Rs 3.00/kWh (4.61¢/kWh). If the limits are indeed implemented Tamil Nadu would be assured of the cheapest solar and wind power supply ever in its history.
Tamil Nadu had allocated 1.5 gigawatts of solar power capacity last year at prices ranging from Rs 3.47/kWh to Rs 4.00/kWh (5.33¢/kWh to 6.15¢/kWh). Thus, the new upper limit for solar power tariff is at a huge discount of 13.5% from the previous low for the state. The lowest solar power tariff in India is Rs 2.44/kWh (3.75¢/kWh) but the bids have now stabilized to around Rs 3.00/kWh (4.61¢/kWh).
The last wind energy auction organized by TANGEDCO saw allocation of 450 megawatts capacity at the lowest tariff of Rs 3.42/kWh (5.25¢/kWh), which was the lowest wind energy tariff bid at that time for the entire country. The lowest tariff for wind energy projects in India stands at Rs 2.43/kWh (3.73¢/kWh). The last wind energy auction held in India, by Maharashtra, yielded the lowest tariff bid of Rs 2.85/kWh (4.38¢/kWh), so the upper limit of Rs 2.65/kWh seems reasonable for a resource-rich state like Tamil Nadu.
Chances of success in the wind energy tender are higher compared to those in solar power tender. Recent solar power tenders issued by Maharashtra and Karnataka have seen lower participation from project developers due to concerns over increased price of modules and possibility of the government levying duties on imports.