Inox Wind Ltd had won a 250 MW bid, which was the maximum permissible limit for a single entity, out of the 1000 MW Auction carried out by Central Govt. agency in Q1 of 2017. The price of electricity to be supplied is close to Rs.3.50 per unit (KWh). Inox Wind had also won an order for another 50 MW for supply of WTGs for an IPP (Independent Power Producer), who had also won a bid in that auction. Today Inox Wind has announced that it has again won a 250 MW bid in the second auction carried out by Central Govt agency in this week. The price of electricity to be supplied has been set at Rs.2.65 per unit.
These are surprisingly low bids for Wind Power, considering the fact that until about a year or so ago, the Wind Power tariffs were well above Rs.5 per unit and it was over Rs.8 per unit about 2 or 3 years ago. So the question that arises is that whether it will be profitable for these companies to supply electricity at such low prices and how long will it take to recover their Capital Investments.
Let's consider it from an IPP's point of view, which has won a bid for 250 MW at a price of Rs.2.65 per unit. The Capital Investment required for setting up a WTG is approximately Rs.6 crores per MW. Hence the Capital required for setting up 250 MW capacity will be about Rs.1500 crores. The Capital required for setting up Power evacuation infrastructure will be relatively much smaller and hence I am ignoring it. If all these 250 MW capacity WTGs remain operational 24 x 7 for all 365 days of the year, they will generate about 219 crore units of electricity every year. But the Wind flow is not that consistent everywhere throughout the day or year and hence we can expect about 35 to 40% efficiency overall. Hence the number of units generated will be approximately 80 to 85 crores per year. At the rate of Rs.2.65 per unit, it will translate into revenues of about Rs.220 crores per year. This is close to 15% of the CAPEX involved in this business. Since the electricity is being sold to Power Trading Corporation and not directly to any State Electricity Boards, the payments for the same are expected to be timely. Hence these IPPs should be able to afford Cost of Capital of about 8 to 9% per annum with 20 or 25 years repayment terms.
Inox Wind has already announced that it will be looking to sell majority stakes in the SPVs that will be used to commission the two projects, as it does not intend to remain a Wind Power generator, and focus on it's primary business of being manufacturer and supplier of WTGs. Considering the fact that this business is expected to be profitable even at such low prices, Inox Wind should be able to find buyers for the stakes in these SPVs. Going forward, we may see stabilisation in prices of electricity generated from Wind Turbines around these levels. Any further drop in prices for electricity will need higher efficiency from the WTGs or lower manufacturing costs for them.
These are surprisingly low bids for Wind Power, considering the fact that until about a year or so ago, the Wind Power tariffs were well above Rs.5 per unit and it was over Rs.8 per unit about 2 or 3 years ago. So the question that arises is that whether it will be profitable for these companies to supply electricity at such low prices and how long will it take to recover their Capital Investments.
Let's consider it from an IPP's point of view, which has won a bid for 250 MW at a price of Rs.2.65 per unit. The Capital Investment required for setting up a WTG is approximately Rs.6 crores per MW. Hence the Capital required for setting up 250 MW capacity will be about Rs.1500 crores. The Capital required for setting up Power evacuation infrastructure will be relatively much smaller and hence I am ignoring it. If all these 250 MW capacity WTGs remain operational 24 x 7 for all 365 days of the year, they will generate about 219 crore units of electricity every year. But the Wind flow is not that consistent everywhere throughout the day or year and hence we can expect about 35 to 40% efficiency overall. Hence the number of units generated will be approximately 80 to 85 crores per year. At the rate of Rs.2.65 per unit, it will translate into revenues of about Rs.220 crores per year. This is close to 15% of the CAPEX involved in this business. Since the electricity is being sold to Power Trading Corporation and not directly to any State Electricity Boards, the payments for the same are expected to be timely. Hence these IPPs should be able to afford Cost of Capital of about 8 to 9% per annum with 20 or 25 years repayment terms.
Inox Wind has already announced that it will be looking to sell majority stakes in the SPVs that will be used to commission the two projects, as it does not intend to remain a Wind Power generator, and focus on it's primary business of being manufacturer and supplier of WTGs. Considering the fact that this business is expected to be profitable even at such low prices, Inox Wind should be able to find buyers for the stakes in these SPVs. Going forward, we may see stabilisation in prices of electricity generated from Wind Turbines around these levels. Any further drop in prices for electricity will need higher efficiency from the WTGs or lower manufacturing costs for them.
No comments:
Post a Comment