Drawing on the power of a centuries-old trading trick, India, much like other Asian countries, is geared up to boost its renewable energy market with auctions.
According to a report by Bloomberg NEF, the nation has now become the largest market to hold these auctions. In 2017 alone, 11 Gigawatts of projects were assigned through competitive bidding. And between 2017 and 2019, the same number rose to 35 GW.
With a clean energy investment of $7.4 billion, India has made headway into the global solar power sector, in particular. While the government’s tariff thresholds imposed on renewable energy have hurt the industry, the Solar Energy Corporation of India (SECI) is now providing a much-awaited relief from these restrictions.
According to the Climate Group, the new tariffs have reached a record low of US¢3.39/kWh. Consequently, the latest round of bids has seven developers setting up 1.9 GW of solar PV projects across the country.
The South Asian Renewable Energy Magnet
Energy watchers have analyzed the model that is doing so well for this budding clean power hub. The 58% cost effectiveness generated from auctions is one of the biggest reasons. They also found that the best way to make these auctions more purposeful is to up the level of competition in a controlled environment.
What makes India such a great contender for renewable energy investment, you ask? It’s the country’s well-established domestic supply chain. Its aggressive policy thrust towards clean power. And its conscious effort to reduce coal capacity targets. Credit is also due, in part, to these investor focused price auctions that keep its energy market clean, green and oh so interesting.
However, are low tariffs and competitive auctions enough to tackle recurring bottlenecks in payment by off-takers and regulatory approvals? Or will they hinder the nation’s zealous target of installing 175 Gigawatts of renewable energy assets by 2022?
Only time will tell.