India is expected to compete a landmark renewable energy auction by late next month in its endeavour to increase competition and reduce generation costs in the wind energy sector.

Officials of the Ministry of New and Renewable Energy have stated that the first-ever wind energy auction in India will be competed by next month. The Solar Energy Corporation of India, responsible for conducting the auction, has already issued the tender documents. The last date for submission of bids is 15 December 2016.

As per final guidelines, the auction of 1 GW onshore wind energy projects will be conducted through reverse e-bidding. A total capacity of 1 GW will be allocated in the auction, however, this capacity may increase if there is such a demand from buyers.

The minimum capacity bid for a single location shall be 50 MW while a company (along with its parent, affiliates and subsidiaries) can bid for a cumulative of 250 MW. Project developers shall be required to sign a power purchase agreement with SECI which will, in turn, sign a power sale agreement with the buyers (most likely the utilities in various states). A trading company shall also be involved responsible of the final delivery of power to the buyers.

All awarded projects are to be commissioned with 18 months of allocation. Project developers, however, will be allowed to claim part commissioning the project by completing 50 MW or 50% of the allocated capacity, whichever is greater. Project developers shall face financial penalties for delayed commissioning or shortfall in minimum generation.

The main goal of this proposed auction is to allow states that lack wind energy resources purchase electricity from wind energy projects and meet their non-solar renewable purchase obligations.

While no base price for the auction has been set, the feed-in tariffs for wind energy projects in various states could serve as the benchmark for reserve auction.