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9 August 2019

India’s promised renewables + storage auction rules set for 1.2 GW

India’s SECI has put out a 1.2 GW tender for renewable energy plus storage, a deal that we think will attract far more attention than previous hybrids which were just solar plus wind. The potential exists for international developers joining the party who have experience with storage projects. The projects can be based anywhere in India, be solar, wind or a hybrid with storage, and their success will potentially upgrade Indian renewables to up to 6 hours of dispatchable power. Very few local developers will have experience with this type of set up, so the award could be significant for renewables in India and stimulate more interest in India.

The auction is on a build and operate basis with a 25 year PPA, and the minimum storage capacity is to be 25% of the peak capacity and four times the capacity in hours of energy. So if the bid is for 200 MW of peak capacity, the battery must be at least 50 MW capacity and offer 200 MWh. Bids are expected from 50 MW to 300 MW in 10 MW breaks.

The winning bidders can use any storage technology with the provision that it is already commercially available and are not prototypes or brand new systems.

Once these systems are commissioned and installed they will significantly change the distribution of storage systems across the world and open a new frontier in India – but of course at a very low price. The systems will have a minimum off peak energy price of 2.7 Rupees per KWh (4 cents) and the peak price goes to the lowest bidders in a two envelope reverse auction.

The technology for the Energy Storage technologies is to be agnostic although there are safety specifications for Lithium Ion and Nickel technologies listed, so it is assuming most will be Lithium. We would not be surprised to see Vanadium Flow systems bid in this auction also.

The proposed systems can be Wind-Solar Hybrid projects, but must adhere to the specific hybrid policy of the State where the Project is located. Presumably any developer that has a developed plan with storage in a particular region has already pre-qualified it to state regulations.

Regardless of the storage technology used the hybrid must be responsible for a minimum 6-hour Peak Power supply, on a daily basis.

India has carried out solar wind hybrid auctions before, but without storage  and they have always been under-subscribed with Softbank-backed SB Energy and Adani Green Energy winning 840 MW of such a hybrid auction in 2018, when the tariff was set at the same as the off-peak tariff in this auction. This low price was seen as the reason why it only attracted two bidders despite being cut back from 2.5 GW to 1.2 GW prior to the bidding.

In March SECI said it planned a series of auctions, one being this hybrid storage auction which would bring in 3.6 GW in total. The first of these were underbid also, but did not involve storage,