Govt to put an end to e-reverse auction for RE projects: MNRE Secretary

• The government procurement system will move towards state-specific bids so that tariffs can be pooled
• Govt has managed to precipitate the growth of a strong private sector in the space, using policy support, said the MNRE Secretary

New Delhi: The government has agreed in-principle to put an end to the E-reverse auction for renewable energy (RE) projects and a formal announcement on the same will follow soon, said Indu Shekhar Chaturvedi, Secretary, Ministry of New and Renewable Energy (MNRE), on Thursday. Delivering the inaugural address at the Confederation of Indian Industry's (CII) 'India @2030: A Roadmap for Atma Nirbhar Bharat in Renewable Energy' conference, Chaturvedi said, "I can say with confidence that the reverse auction arrangement has in-principle been decided to be ended. A formal decision will follow soon."

He added that the government procurement system will move towards state-specific bids so that tariffs can be pooled.

E-reverse auction vs closed bidding

The statement assumes significance as this has been a long-standing demand from the renewable energy industry. It has contended that e-reverse auctions lead to intense competition as bidding happens in real-time, like a typical auction process, and bidders keep lowering the bids to secure the project, which sometimes leads to tariffs so low that projects become unviable.

The e-reverse auction regime was first introduced by the government for the procurement of LED bulbs and was later extended to coal linkages and solar and wind projects. Since bidding takes place in real-time, bidders are able to see the bids and revise their own. In contrast, the closed bidding process allows bidders to place just one bid.

A strong private sector in RE space: Chaturvedi

While mentioning that India's RE capacities have doubled in the last eight years and India's total non-fossil fuel-based installed capacity stands at 167 GW, the MNRE Secretary said that the country has managed to precipitate the growth of a strong private sector in the space, using policy support.

"Today, all our RE capacity additions come from the private sector. The investment has automatically flowed; the government has not had to make extra efforts to attract investment. This points to the strength of the private sector, the bankability of projects, etc. We have a strong contractual framework," he said. He added that while policy support from the government has been strong, it has to be pro-active going forward.

Referring to the revised target of putting in place 500 GW of non-fossil fuel-based capacity in India by 2030 announced by Prime Minister Narendra Modi in Glasgow last year, the MNRE Secretary said, "Our targets are huge. What gives us confidence is our past record. We also must realise that these huge targets will need action that are out of the ordinary."

Making a case for bringing down the cost of battery storage systems, the MNRE Secretary stressed on the need for reliable and consistent supply from the RE industry, which might be expensive in the short term due to the higher cost of battery storage but would be important in the long term. "Storage (battery) costs need to be brought down because going forward, grid integration is going to be an issue. If grid integration has to be smooth, there has to be firmer power available which discoms can buy," he said.

Bidding regime for wind projects

Referring to a long-standing demand from the wind energy industry for a change in the bidding framework, Chaturvedi said, "On one hand, we see demand for wind energy and on the other, we see projects which are languishing. This point needs to be recognised and the bidding structure and the old dispensation need to be looked at; we have already done it."

Second round of announcements on green hydrogen in 2 months

The MNRE Secretary told the industry that it can expect the second round of announcements on the Green Hydrogen policy in the next two months as it was at the "highest stage of approval." The government had announced first round of incentives for green hydrogen production in India on February 17 this year. The policy allowed free power transmission to renewable energy units set up by green-hydrogen producers and a power banking facility for 30 days.

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