Wind Auctions Destroying the Industry, Says Industry Body in SC Petition Opposing Gujarat Auction

Small scale manufacturers of components for wind turbines are being squeezed by the relentless fall of wind energy tariffs in successive auctions, according to the petition filed by the Indian Wind Energy Association (Inwea) in the Supreme Court, whose admissibility will be decided soon.
The petition, opposing the 500 MW wind energy auction Gujarat’s power utility Gujarat Urja Vikas Nigam Ltd (GUVNL) wants to hold, harps mainly on technicalities, maintaining that the auction is contrary to law because the Centre has not yet issued guidelines on the conducting of such auctions, as required by Section 62 of the Electricity Act, 2003, and Section 6.4(2) of the National Tariff Policy, 2016. Another industry body, the Indian Wind Power Association (IWPA), has also made an intervention in the matter, supporting Inwea’s petition with similar arguments. 
But Inwea’s also draws attention to the plight of the segment due to the fall in wind tariffs. “Competitive bidding ...could squeeze the developers of wind generators to put more pressure on the original equipment manufacturers (OEMs) ...and in the absence of lowering of costs... developers would be forced to import the said equipment...thereby frustrating the Make in India policy,” it said. “It will lead to sustainability issues for the small scale sector ...and would also affect scores of jobs direct and indirect.”
Wind energy tariffs, formerly fixed solely by the power regulators of the wind energy producing states, had varied between Rs 4 and 6 at the beginning of this year. The first 1000 MW wind auction, conducted by Solar Energy Corporation of India (SECI) in February, brought the winning tariff down to Rs 3.46 per unit, while the second, in October, lowered it further to Rs 2.64 per unit. 
An industry source maintained the bleak future Inwea’s petition predicts had in fact already come to pass. “Around 30-40% of the OEMs vendors, most of which are small and medium enterprises, have already shut down,” he said. “In their eagerness to win auctions, wind developers have been quoting unrealistically low tariffs and then forcing the OEMs to lower turbine prices. The OEMs have no choice since developers are their only customers, but they in turn are similarly squeezing their forcing many to shut shop.” 
A leading investor in several wind energy projects, however, felt wind turbine makers were equally to blame. “If only they were bold enough to hold their prices, developers would know their limits and aggressive bidding would not happen,” he said. 
The OEMs claimed they were not opposed to wind auctions, but wanted ‘closed bid’ ones, in which developers submit tenders quoting a fixed tariff, whose viability has been worked out in advance with the OEMs and their vendors. “In reverse auctions, the winning bid is arrived at dynamically, so no pre-bid tie-up with an OEM is possible,” said the industry source. “Tie-ups happen only afterwards, which leads to arm twisting.” 
So far, however, Inwea’s efforts to stop reverse wind auctions have proved futile. It has approached the Supreme Court only after its petition was twice dismissed, first by a single bench judge of the Gujarat High Court and later by a division bench, in November.