Centre to do away with the reverse auction method for wind-energy projects

• Ministry of New and Renewable Energy (MNRE) said it would stop the practice of reverse auctions while awarding contracts for setting up wind-energy projects.

Associated concerns with Reverse auction

• India has committed to install 60,000 MW of wind power projects by 2022, but has met only two-thirds of the target.
• Reverse auctions has led to tariffs being artificially lowered leading to unhealthy competition.
• It was used for all renewable energy projects since 2015 but it do not reflect true costs of renewable energy.

Reason for dip in health of the sector

• Huge cost of land required to install wind turbines
• Limited availability of prime sites favourable for cost-efficient wind power projects
• Poor financial health of State electricity distribution companies
• Regions with suitable sites for developing wind farms are usually unconnected to the electricity grid.
• Huge costs are involved in ensuring electricity from wind farm to grid.

Prelims take away

• Renewable source of energy