Private Utility In India Issues 350-Megawatt Solar-Wind Hybrid Tender

A private power distribution company in India issued a tender to procure energy from solar-wind hybrid projects with a goal to fulfill its Renewable Purchase Obligation, and possibly, to reduce the cost of power procurement.

Adani Electricity Mumbai Limited (AEML) issued global tender inviting bids from project developers to set up 350 megawatts of solar-wind hybrid capacity. The tender also offers a Greenshoe option of 350 megawatts. A bidder shall be eligible to bid for the entire 700-megawatt capacity, but AEML has discretionary authority to contract the second 350 megawatts.

AEML is one of the power distribution utilities that services India’s financial capital, Mumbai. The company is a subsidiary of the conglomerate Adani Group which bought out Reliance Infrastructure Limited, the previous distributor of electricity in Mumbai.

In the recent past, private distribution companies in India have issued similar tenders to procure renewable energy. Torrent Power, a distribution utility servicing the cities of Ahmedabad and Surat, issued a tender to source 300 megawatts of solar power. The tender was, however, cancelled without any bidding taking place.

The trend mirrors the shift in the Indian renewable energy market from regulated feed-in tariffs to competitive auctions. Power distribution companies earlier signed power purchase agreements with project developers at tariffs regulated by government-appointed agencies. However, over the last few years, government-owned power distribution companies have started issuing tenders to procure renewable energy; private utilities are now following the same route.

The auctions route has yielded highly favourable results for power distribution companies, which have managed to contract a significant volume of renewable energy at very low tariff rates.

Reliance Infrastructure, which was bought out by the Adani Group, had signed a power purchase agreement with a 40-megawatt solar PV power project located in the state of Rajasthan. While the PPA is expected to continue to serve AEML as well Reliance Infrastructure also had some unmet Renewable Purchase Obligation which is now the responsibility of AEML; hence the issuance of this fresh tender.

This is the first solar-wind hybrid tender issued by a private utility. So far, hybrid tenders have been issued only by government-owned entities or intermediaries, like the Solar Energy Corporation of India. SECI has awarded a total capacity of 1.56 gigawatts in the two auctions it has conducted so far. Interestingly, another Adani Group company — Adani Green Energy — has secured 990 megawatts of this awarded capacity.