Japanese-invested Indian firm wins tender to supply renewable energy 24-7

13, May. 2020

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By Atul Ranjan

NEW DELHI, NNA – Indian renewable energy producer ReNew Power Pvt. Ltd., which is invested by the Japanese energy firm JERA Co., the world's largest liquefied natural gas importer, has signed a unique agreement to supply renewable energy 24 hours.

The company announced Tuesday that it had won a bid in India to produce 400,000 kilowatts of renewable energy through a project that will operate and supply renewable power 24 hours.

ReNew Power, which clinched the bid by offering 2.90 rupees ($0.038) per kw hour, could increase it by 3 percent per year over the first 15 years of the 25-year term. The project must start up within two years.

“What makes the tariff a historic one is the fact that this tender provides for a round-the-clock energy supply from 100 percent renewable-based energy generation sources,” India’s Ministry of New and Renewable Energy said.

ReNew’s rates are “a much better” deal than what power distribution companies charge for conventional energy, the ministry statement said. It described the auction as “closely fought.”

In 2017, JERA, the equally owned joint venture between TEPCO Fuel & Power Inc. and Chubu Electric Power Co., both major regional utilities in Japan, acquired an equity stake of 10 percent in ReNew seeking to tap into India renewable energy market.

The Indian firm generates over 5 million kw of energy today through solar and wind sources and has another 3.4 million kw under development.

Power from the project will be supplied to New Delhi Municipal Corp. and the union territory of Dadra and Nagar Haveli and Daman and Diu. Each customer will take capacity of 200,000 kw.

The company called its success a historical turning point.

“The tariff rate, the need for round-the-clock supply, 80 percent annual capacity utilization factor and 100 percent power from renewable sources made this one of the most unique tenders of the Indian renewable energy sector,” chairman and managing director Sumant Sinha said in a statement Tuesday.

“By winning this tender, ReNew has set a new benchmark for providing stable power through clean energy sources,” he added.

The tariff looks very attractive to energy buyers and would be able to procure renewable energy at competitive prices, said Vinay Rustagi, managing director at renewable energy research firm Bridge to India.

“Moreover, these prices would be fixed for 25 years unlike thermal power prices, which are unpredictable due to changes in fuel price, inflation, et cetera,” Rustagi told NNA Tuesday.

But it’s unclear, he added, whether buyers will sign long-term power purchase agreements in the face of historic lows in demand.

Under the terms of its agreement, ReNew must operate at 80 percent capacity utilization annually and with a 70 percent plant load factor every month to its buyers.

A normal renewable energy project in India operates at a 30-40 percent capacity utilization rate, with specific levels depending on project technology and the availability of upstream resources, ReNew believes.

“The tender has stringent requirements to provide power round-the-clock on a monthly and annual basis with strict penalties for non-compliance with schedules,” Rustagi said.