Suzlon, Inox Wind shares fall nearly 5%

Shares of Inox Wind are down 5%, while those of Suzlon declined nearly 3% on Monday after reports suggested that the Ministry of New and Renewable Energy (MNRE) is looking to bring back "reverse auctions" for auctioning wind power capacity to energy companies.

The ministry has sent a letter to companies like NTPC, NHPC, SJVN and other PSUs with the directive, citing reasons of undersubscription and higher tariff discovery in recent wind bids, according to the reports.

As per the report, the MNRE has reinstated the earlier approach of reverse auctions, limited the size to 600 MW for plain vanilla wind tenders and mandated the issue of bids on a pan-India basis by renewable energy implementing agencies.

NTPC, NHPC, SJVN are Renewable Energy Implementing Agencies to developers like Suzlon and Inox Wind, along with state agencies.

Analysts on the street believe that the MNRE directions are a negative for equipment suppliers and developers.

They further said that tariffs coming down would impact returns for developers like ReNew and NTPC and may also lead to margin pressure for equipment suppliers.

A reverse auction means that bidders can keep bidding after the initial bids are opened, until a bid tariff goes unchallenged.

They were introduced for wind energy in 2017, replacing the existing feed-in tariff mechanism. The move was called off last year.

The industry believes that tariffs between ₹3.2 - ₹3.5 per unit are ideal for the sector.

Shares of Suzlon are trading 3.3% lower at ₹42.5, while those of Inox Wind are locked in a 5% lower circuit at ₹552.65.