This article traces the success of competitive bidding in power procurement across the electricity sector over the past two decades. It highlights the significant progress made in the renewable energy sector, where competitive price discovery and widespread participation by both large and small, private and public players have been encouraged. 

In the context of India's substantial achievements in this area, the article also notes a concerning trend in some states. Two states have each allocated the majority of the required capacity addition from coal and solar sources for the next 6-7 years through a single tender. Even though the entire coal and solar capacity is expected from 1-2 bidders, the coal and solar plants will continue to operate independently through separate contracts. The combined investment requirement from these two tenders is about Rs. 80,000 crores. Each bidder is required to bid for the entire capacity in one state or at least half the tendered capacity in the other. 

This approach excludes smaller players due to the massive investments required and eliminates the potential for tariff reductions and innovations from spreading procurement over time - a benefit particularly relevant for solar projects. It may also make it difficult for some players to secure capital at this scale, or put those without thermal power expertise at a disadvantage. The article emphasizes that the advancement towards robust price discovery through competitive bidding should not be undermined by such arrangements.

This article was published by the The Indian Express on 16th September 2024. A version of the article can be downloaded from this page.