Variable Renewable Energy (VRE) tenders issued annually in India have fallen to about 28 gigawatts (GW) in 2022 from 40GW in 2019.
Poor financial health of state DISCOMs and rising solar module costs are keeping away developers from recent tenders.
Distribution companies (DISCOMs) are no longer seeking plain vanilla solar and wind projects and instead want wind-solar hybrid or renewable energy coupled with storage.
Some renewable energy-rich states, like Karnataka and Andhra Pradesh, have slowed tender issuance as they have achieved their renewable purchase obligation (RPO) targets.
Exceptionally successful reverse auctions drove the growth of solar and wind energy in India in the mid-2010s. The Solar Energy Corporation of India (SECI) is the key central government entity responsible for issuing new tenders, concluding auctions, and galvanising key Indian and global investor and corporate interests at scale. SECI accounts for almost half of all renewable energy tenders issued in India. However, meeting Prime Minister Narendra Modi’s target of 450 gigawatts (GW) of renewables by 2030 requires more tenders.
The total tenders issued for solar, wind and hybrid from 2010 to 2022 amounted to 161GW, with an allotted capacity of 114GW. Over the past few years, tendering (both issuance and allotment) of utility-scale projects (mainly solar and wind) has shown a downward trend and is not in tandem with government targets.
Variable Renewable Energy (VRE) tenders issued annually in India have fallen from 40GW in 2019 to about 28GW in 2022. Several contributing factors are leading to the recent slow uptake in renewable energy tender issuances.
First, there is a noticeable shift in the offtaker power demand profile. Despite VREs representing a very low share (11.5%) of the fiscal year (FY) 2022 electricity generation share nationally, distribution companies (DISCOMs) no longer prefer plain vanilla solar and wind projects. Instead, because of VRE’s inherent intermittency and seasonality, DISCOMs seek alternate clean energy solutions that offer more stable and firm power, such as wind-solar hybrid and renewable energy coupled with energy storage.
For India to reach its climate targets by 2030, it needs to add more than 30-35GW of new VRE capacity annually. However, the VRE tendering in India is still not in tandem with the targets. Various measures can address this:
With enhanced maturity of tendering authorities in the next couple of years to design inclusive and technologically balanced tenders, the more than 35GW target, although ambitious, seems attainable if SECI, NTPC and other state agencies can leverage the huge progress made to date. The global financial capacity and investment interest in India's zero-emissions energy and grid infrastructure is a global success story that other nations are looking to emulate. Now is the time for India to leverage this enormous progress and double activity in domestic, deflationary, and zero-emissions electricity capacity expansions to diversify and strengthen the grid system while providing for the expanding energy needs to support India’s sustained, robust economic growth.