Ramesh Kymal, Chairman CII-SR Power, Renewable Energy & Infrastructure Subcommittee, told BusinessLine the government should consider offering ‘feed-in tariffs’ as it had done till 2017. “This paved way for price discovery through the competitive bidding process,” he said.
Wind, meanwhile, saw a drop in installation activity due to the transition from a feed-in-tariff (FiT) scheme to auction mechanism, with less than 2 GW of new wind parks coming online, a year-on-year drop of 68%.
The tariff rules for thermal power are different from wind power. Thermal power plants have two-part-revenue: fixed and variable. If a thermal power plant is asked not to feed generated power to the grid, it will still be compensated the fixed part of the tariff. Wind plants do not receive this since there is no cost of fuel, so there is no fixed-part tariff.
The government is shifting toward auctions to buy electricity from wind, phasing out feed-in tariffs that guarantee a fixed price to producers for their power. Utilities that pay for the power are pushing developers who qualify for the fixed payments to match the lower costs auctions are achieving.
Feed-in tariffs typically mean long-term contracts and guaranteed pricing tied to costs of production for renewable energy producers that the government offers to cover risks and encourage investment.
With tax benefits scaled down and some states reducing tariffs, there is a danger of the wind sector getting short shrift at a time of heightened focus on solar power
The fall in feed-in-tariff (FiT) and non-extension of generation based incentive (GBI) for wind projects will adversely affect the internal rate of return for the new projects, says India Ratings and Research (Ind-Ra).
The southeastern Indian state has cut its favorable FIT for solar PV by 27%, bringing it closer in line with average FITs across the country, while also increasing the FIT for wind projects within the State.
Hindustan Cleanenergy, one of the largest solar energy producers in the country, says India should switch to feed-in-tariff mechanism to award renewable energy projects for speedy implementation and reasonable returns for stakeholders.
KERC has proposed a revised feed-in tariff (FIT) for rooftop and installations to come into effect on January 1, 2016. The new, lower FIT will apply to PV arrays sized between 1 kW and 500 kW, and would bring the level of support down from 9.56 INR ($0.14)/kWh to 8.40 INR ($0.12)/kWh for those system owners that have not received further subsidies