Wind power tariff may drop marginally to Rs 3.2 per unit in the second auction for 1 GW capacities scheduled on Wednesday as against Rs 3.46 per unit discovered in the first competitive bidding held earlier this year, an industry source said.

 “There will not be free fall of tariff in case of wind energy in the second auction scheduled on October 4, 2017 as happened in case of solar power for which tariff is also bottomed out. The wind power rates in the auction may not drop beyond Rs 3.2 per unit,” the source said.

Earlier this year, wind power tariff dropped to all-time low of Rs 3.46 per unit in the auction of 1 GW capacities conducted by Solar Energy Corporation of India (SECI). Solar power tariff ranged between Rs 2.65-3.36 in an auction conducted by Gujarat Urja Vikas Nigam (GUVNl) last month for 500 megawatt (MW) capacities. This was slightly up from all-time low  rate of Rs  2.44 per unit discovered earlier this year.

“Wind power players are likely to be aggressive in the second wind auction keeping in mind the viability of the project. The tariff cannot go be lower than Rs 3.2 per unit even after factoring in more competitive cost of equipment and cost of borrowing.”

The SECI is also conducting the second auction for another 1GW capacities. The second auction assumes significance because India has set an ambitious target of having 60,000 MW of wind power capacity by 2022. India has installed wind power capacity of 32.5 GW as per latest report for the month of August by the Central Electricity Authority.

The country needs to add 5-6 GW wind capacity every year to meet the target.last month, the Government had decided to postpone the second wind power auction for 1 GW capacities to October 4 in view of some issues about transmission connectivity between states.

Certain bidders and developers have been grappling with the issue of inter-state transmission connectivity. According to the tender, one of the conditions in the bid is to have connectivity with Inter-State Transmission System (ISTS). The responsibility to get connectivity is with the bidders. The CERC has reserved its order on the petition, after hearing all the inputs pertaining to the relief sought.The renewable energy players had sought immediate relief pertaining to connectivity for successful bidders for first wind power auction conduced earlier this year.