Power News We love to talk!

MAY 31 2017

Wind power competitive bidding will reduce tariffs, squeeze returns: CRISIL

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 31st MAY 2017


Competitive bidding in the wind power sector would change the market landscape leading to a sharp reduction in tariffs, pressure on returns across the value chain, and consolidation of the market towards independent power producers, according to research and ratings agency CRISIL.

According to its report released today, under-construction capacities without Power Purchase Agreements (PPAs) are the most at risk. “To compete in bids, developers are likely to put pressure on wind power original equipment manufacturers (OEMs), denting their profitability. Also, developers would go for the self-development model, piling more pressure on OEM margins as the premium charged for value-added services like clearances, wind resource assessment and grid connectivity would come down,” said Prasad Koparkar, Senior Director, CRISIL Research.

He also stated OEMs having land banks with high wind potential and proximity to the central transmission utility will be less impacted because these would fetch a premium. The report notes that while deployment of latest technology and lower financing charges would reduce generation cost, aggressive bids by developers to scale up their portfolios will mean suboptimal equity internal rate of return.

”However, the market for wind power would expand with more active participation by the central government, which reduces the risk for developers. Higher offtake from power distribution companies with lower tariffs will also support capacity additions, “the report said.

Crisil also said that eventually, overall compliance with the renewable purchase obligation is expected to increase due to bidding, particularly by non-windy states such as Uttar Pradesh, Haryana, Delhi, Odisha and Chhattisgarh.



Delhi Haryana Uttar Pradesh Odisha Renewable Purchase Obligation Distribution Companies Independent Power Producers Grid Wind Wind Power Power Distribution CRISIL Power

Related News

  • ReNew Power to set up solar rooftop projects for Indian Railways  Read more
  • Mixed response to power bill payment proposal  Read more
  • India sees lowest plant load factor in 15 years; power capacities operating at 65%  Read more
  • SC coal order may hit power tariff & steel output cost, says Icra  Read more
  • Working group for ailing power sector suggests reforms in Tariff and Fuel Supply Regime  Read more
  • Solar power facility from a homebuyer's perspective  Read more
  • Jakson Power plans 100 MW of solar power capacity  Read more
  • TPCIL commences full commercial operation of Krishnapatnam plant  Read more
  • 15 states with 90% accumulated losses of power distributors have joined UDAY: Piyush Goyal  Read more
  • Private power distributors likely to get operational benefits of UDAY scheme  Read more