March 2017

Editor Nandita S. Kochhar

In January 2017, the country’s grid-connected renewable power capacity crossed the 50 GW mark. While wind power comprises 58 per cent of this pie, its share has been declining over the past few years due to the growing popularity of solar-based power. Annual wind installations have stabilised at 2-3 GW levels over the past three to four years; in comparison, solar has been witnessing exponential growth during this period. The share of the latter has increased from 3.6 per cent in 2011-12 to 18 per cent at present. Moreover, for the first time, the annual solar capacity addition is set to surpass that of wind in 2016-17.

The increasing popularity of solar power can be attributed largely to the government’s enhanced focus on the segment. The solar parks policy, incentives for rooftop solar and the use of the National Clean Energy Fund for promoting solar project uptake are some of the incentives that have led to increased investor confidence in this segment over the past few years.

Meanwhile, wind power took a backseat. Issues including curtailment of wind power in various states and delays in signing wind PPAs by certain discoms held back developers from investing aggressively in this space. Moreover, declining PV equipment prices as well as ease of setting up projects made solar power a more appealing proposition for many wind power companies, which decided to foray into the solar power space.

To bring back the wind segment into the renewable game therefore needed a major push. Taking a cue from the solar power policies, the government, in 2016, decided to tender 1 GW of wind projects through the competitive bidding route while also addressing the two aforementioned issues. Despite opposition from a number of stakeholders, in February 2017, the country’s first ever auction of wind power capacity took place. Tariffs crashed to a record low of Rs 3.46 per kWh, marking a sharp contrast to wind feed-in tariffs, which vary from Rs 3.80 to Rs 6.04 per kWh across states.

By and large, the auction process is being viewed in a positive light, although the jury is still out on the financial viability of these projects. While only time will tell if these projects will generate good returns, the auction mechanism has emerged as the most efficient means of achieving the wind power target of 60 GW by 2022.

It should not only aid the financially stressed discoms but also help the wind industry, which can get greater clarity on the pipeline of projects. It will also create new business opportunities and promote innovation as equipment-makers will be forced to lower prices and increase efficiencies to make the cut.

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