September 2018

Editor Dolly Khattar

After a year of lull, the wind power segment in India has regained momentum with 9 GW of capacity tendered as of August 2018. The current installed wind capacity stands at about 35 GW, implying that an average of 6 GW needs to be added per annum to achieve the 60 GW by 2022 target. In the long term, by 2030, the government intends to have 140 GW of wind power capacity.

In the current auction-based regime, market dynamics are changing rapidly. Industry consolidation is gaining momentum and project sizes are becoming larger, bringing in advantages of scale at the project level. Wind tariffs have reached a new normal, which is more acceptable for discoms that were earlier not willing to purchase costlier wind power. As a result, financiers are increasingly finding the wind segment a safe bet.

There is an increased focus on technological innovation by manufacturers as they work towards bringing down the levellised cost of energy and increasing the plant load factor (PLF). The next-generation turbines from leading manufacturers are likely to deliver 35-40 per cent PLFs in high-wind states, which is almost twice that for solar power.

Moreover, the government is giving a significant push to new technologies and project designs. Policies for both solar-wind hybrids as well as offshore wind have been finalised. The target for solar-wind hybrids has been set at 10 GW by 2022, and that for offshore wind has been set at 5 GW by 2022 and 30 GW by 2030. It is now working towards finalising the National Energy Storage Mission, which is likely to have positive implications for the wind power segment.

On the regulatory front, there is an increased focus on the effective implementation of forecasting and scheduling norms at the state level. Issues pertaining to the banking of wind power and must-run status are also being resolved speedily. The waiver of interstate transmission charges has also been a positive move.

However, the segment faces several risks and concerns, with the biggest challenge pertaining to grid connectivity allocation and access. This will not only lead to significant delays in project development but also cost escalations. Progress in terms of enhancing and upgrading the transmission and distribution infrastructure to be able to absorb higher renewable energy capacities has been slow so far, but SECI, Powergrid, the CERC and the state nodal agencies have come together on a common platform to resolve the challenges. Meanwhile, reverse bidding has created a short-term pressure on the value chain, raising questions on the viability of projects at lower tariffs.

The key question that arises now is not about the country meeting the 60 GW target but how long it will take to resolve the aforementioned challenges so as to be able to efficiently manage and operate the 60 GW capacity.

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