RE Capacity Growth in India Needs a Wholesale Change in Approach to Bidding in the FDRE Tenders

This article discusses the evolving landscape of renewable energy (RE) development in India, with a particular focus on the Firm & Dispatchable Renewable Energy (FDRE) tenders introduced by SECI in 2023. These tenders represent a significant shift from earlier, cost-centric models to more sophisticated strategies that demand advanced risk management and market understanding from developers. Drawing insights from markets with more mature power-purchase agreement (PPA) schemes, such as those in Europe, the article emphasizes that Indian renewable energy developers must adapt to these new complexities to remain competitive and sustainable in the growing RE market.

The article outlines several key areas where developers need to focus their efforts:

1. Evolution of RE Tenders: FDRE tenders represent the most advanced stage in India’s renewable energy procurement evolution, requiring developers to match hourly demand profiles with up to 25% relaxation annually.
2. Risk Management Focus: The importance of managing market volatility, price risks, and the challenges posed by excess RE capacity is highlighted, suggesting that developers must develop a long-term market price outlook, optimize battery storage solutions, manage price volatility risks, address volume uncertainty, and mitigate RE price cannibalization.
3. Transition to Developers 2.0: To handle the complexities of next-generation PPAs and to price their bids competitively, Indian developers need to evolve into more sophisticated market players by enhancing their trading capabilities and market modeling. This transition is crucial for navigating the challenges posed by the FDRE tenders and for ensuring sustained success in India’s renewable energy sector.

Authored by Neshwin Rodrigues and Shiv Vembadi, the paper provides a comprehensive roadmap for developers to navigate this new era in India’s renewable energy landscape.