The shares of the leading wind energy companies declined on Monday after reports suggested that the Ministry of New and Renewable Energy (MNRE) bought back “reverse auctions” for auctioning wind power capacity to energy companies.
The Ministry of New and Renewable Energy (MNRE) has reintroduced the “reverse auction” method for auctioning wind power capacity to energy companies. In a letter addressed to companies such as NTPC, NHPC, SJVN, and other PSUs, the ministry explained its decision, citing reasons such as undersubscription and higher tariff discovery in recent wind bids.
This reverse auction approach involves bidders competing against each other even after the initial bids are opened, continuing until a tariff remains unchallenged by a counterbid. MNRE has specified a limit of 600 MW for plain vanilla wind tenders and mandated bids to be issued on a pan-India basis by renewable energy implementing agencies.
The wind industry stocks were disappointed with the ministry’s decision to reintroduce reverse bidding, as companies believe that excessive focus solely on maintaining low tariffs is impeding the growth of capacity in the sector. Consequently, significant declines were observed in major wind energy stocks during Monday’s trade.
Here are the two stocks that declined after the center implemented the reverse auction process
Inox Wind Energy Ltd
The shares of Inox Wind Energy hit a lower circuit of 5 percent to ₹6,574.10 per share on monday. The company has a market value of ₹7,953 crores.
In a recent development, Inox Wind Ltd (IWL) and CESC Ltd. have entered into a binding framework agreement, outlining plans for the installation or supply of 1,500 MW of wind capacity over the next three to four years.
Suzlon Energy Ltd
The shares of Suzlon declined by 5 percent to ₹41.77 per share on monday. The company has a market value of ₹57,514 crore.
As of May 30, 2023, Suzlon Energy Ltd possesses a cumulative wind energy capacity of 43.20 GW. This constitutes a portion of Suzlon’s overall renewable energy capacity in India, encompassing 67.82 GW from solar power and 43.20 GW from wind power.
Written by Omkar Chitnis
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