Wind industry must brace the headwinds to stay relevant

Despite its many challenges, wind energy in India has a lot to gain from its experience and its large manufacturing base

By Shweta Miriam Koshy
Published: Friday 25 January 2019

India’s wind energy industry has had a lustrous past. It developed on the back of incentives (accelerated depreciation and generation based incentives), bolstered by very comfortable feed in tariffs (FiT). What began in the late 1980’s has grown to 35 gigawatt (GW) capacity today.

In 2016, however, the government shifted to the auctioning regime for tariff determination. This was a worthy effort to bring competition into a cost-complacent market, especially in light of the success solar energy had achieved.

The wind industry could have made this jump much earlier on its own terms but failed to do so. Rumours about this incoming transition were rife and served as advance notice, yet they failed to adapt. Installations stalled, falling from 5.4 GW in 2017 to 1.7GW in 2018, and less than 1 GW is expected in 2019.

New Delhi-based non-profit Centre for Science and Environment’s (CSE’s) State of Renewable Energy Conference 2019 held a panel discussion specifically on the diminishing role of wind energy in India’s power mix.

Suman Nag, chief commercial officer, Suzlon, said that despite the slowdown and hiccups, wind energy will continue to be the largest contributor of renewable energy to the overall power generation.

However, he added, this was contingent on the centre and state finding clear solutions for its evacuation, as well as land bottlenecks.

Mahesh Vipradas, vice-president (regulatory and power markets), Sembcorp, drove the point home when he explained that grid infrastructure takes about five years to come online; whereas,   wind power projects could become operational in less than the 18 months assigned to it.

The State of Renewable Energy in India report preempts that the financial issues faced by distribution companies (DISCOMs) will pose a significant threat too. Widely prevalent in the wind-rich state of Tamil Nadu, these issues include payment delays, curtailment and PPA defaults.

The failure of the UDAY scheme, introduced to ease the financial stress on the DISCOMs, has further added to the concerns. With increasing concentration of wind installations in just a few states, these DISCOM issues are bound to intensify.  

“Solar Energy Corporation of India (SECI), too, is stuck in a Catch22 situation where it is pressured into releasing large tenders for wind energy, with no clarity on what DISCOMs will buy,” said Vipradas.

The report also talked about the empty policies introduced by the Ministry of New and Renewable Energy (MNRE) to help expand the utilisation of wind potential in India. All three policies — offshore wind policy, solar PV-wind hybrid policy and the wind repowering policy — have not seen any activity under the ministry’s aegis.

Offshore wind is both technologically tasking and economically demanding. Indian DISCOMs do not have the stomach for the double digit tariffs that offshore auctions would inevitably yield, especially in light of the current cost sensitivity driving the electricity markets.

Discussing the technological benefits of solar PV-wind hybrid projects, Balawant Joshi, managing director of IDAM Infrastructure dismissed the claims calling them “overstated”. He affirmed that hybrid projects require some nuance in designing and planning, or they would just be co-located plants.

Repowering old wind projects — replacing them with newer, efficient technology — could optimise utilisation of high wind potential sites. Joshi also pointed out the major deterrents posed by fragmented ownership and captive consumers.

“There is the need for a third-party player who acts as intermediary — someone who consolidates the old project owners (probably 70-80%) — and then facilitates repowering,” he said.

CSE, in its report, has argued that in addition to consolidating, there was a need to compensate the old project owner for the remaining life of their assets. The estimated tariff increase to be borne by new project owners, to compensate the old projects, was found to be negligible.

Despite its many challenges, wind energy in India has a lot to gain from its experience and its large manufacturing base. “Wind is shackled — the old way of business is dead and the new way has not picked up steam yet,” said Nag.

But it doesn’t have to be this way. Key government and private stakeholders can maximise on the existing policies and ensure a competitive, cost-conscious growth.

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