Green Recovery: Opportunities in the Indian wind power sector

Opportunities in the Indian wind power sector

Rapid development of the wind power sector and local value creation in the supply chain are opportunities for pro­moting economic growth and mitigating climate change. Since early 2020, In­­­dia has committed at least $150 billion to support different energy sources. This in­c­lu­des at least $44 billion for supporting fossil fuels and $37 billion for supporting clean energy. It represents the largest pu­­blic finance commitment to the energy sector in the world.

Renewable Watch presents an extract of the report titled “Capturing Green Reco­very Opportunities from Wind Power in De­veloping Economies” by the Global Wind En­ergy Council. It covers the key ba­rriers in India’s wind power sector, recommendations for green recovery, project pipe­line scenarios and impact analysis…

Key barriers

While the wind power sector has a vast potential for decarbonising India’s national grid and for supporting ambitious cr­o­­ss-continental initiatives such as the Gr­­e­en Grids Initiative launched during COP26, there are a number of barriers to ac­celerate wind energy deployment in India. These are as follows:

Delay in permits and approvals: Getting permits for wind projects in India is complex and is a mixture of centralised and decentralised regulations. Approval for new substations, new grid connections and land leases are all awarded by different government bodies, which makes the process complex and time-consuming. The­re have also been instances of dela­y­ed or cancelled tendering schemes, last-minute renegotiated power purchase ag­ree­ments (PPAs) and delayed payments for developers and other stakeholders. This lack of reliability impacts investor ap­pe­tite. Streamlining permits and clearan­ces by introducing a single-window portal and implementing the National Hybrid Wind Solar Policy is likely to ease issues faced by project developers.

Lack of visibility: Lack of an adequate pipe­line of projects and auction visibility creates uncertainty for developers and inves­tors, and dampens enthusiasm. The­re is no auction pipeline published in ad­van­ce, which prevents wind sector stakeholders from undertaking advanced planning for resources. This increases uncertainty for in­stallation companies, manufacturers and investors as well as flattens co­mpetition in the market with smaller de­velopers becoming hesitant to enter the market. Delayed or cancelled tenders and surrendering of projects, renegotiated PPAs and delayed payments for developers also in­crease investor risk and hinder wind sector growth.

Grid concerns: Lack of grid visibility impacts certainty and can lead to low participation in auctions. Advanced planning between electrical grid and energy generation is challenging, leading to project delays. For example, incidents have occu­rr­ed where a new substation has been au­thorised by one body and subsequen­tly built, but the grid connection has not been authorised by its awarding body, causing project delays. Increa­sing coordination bet­ween strategic grid development and future energy generation plans will str­ea­mline future grid connection planning for wind energy.

Land acquisition issues: Wind energy project are largely concentrated on the western coast and in the south of the country due to attractive wind resources. How­ever, land availability is an issue in the­se areas due to private land price es­calation and huge demand for land in specific geographies where good wind speeds are av­ailable. India also has cultural/social sensitivities when it comes to selling land. If the land has previously been used for agricultural purposes or has significance for the local population, the government faces obstacles when trying to auction it for wind project development.

Land acquisition procedures for wind projects have previously been changed retrospectively by government authorities, un­der­mining developer confidence. In some cases, lack of land availability and high re­source potential sites around substations have resulted in grid congestion. En­co­uraging investment in other parts of the co­untry through appropriate zoning ba­­­­s­­­ed on wind availability, and enabling re­­powering of high wind sites, that are currently fitted with low capacity turbines, will help in dealing with the land availability issues that India faces.

Recommendations for green recovery

For India, to be able to accelerate green re­covery and expand the use of wind en­ergy, the following actions for policymakers are recommended:

  • Improving wind industry visibility by establishing an auction pipeline with a three-four year time frame at least. This will give developers time to prepare their bids, increase investor certainty and in­crease competition in the market by de-risking the market for smaller de­velopers. A longer-term auction fra­me­work can also support more efficient coordination with grid planning.
  • Increasing the reliability and certainty of the auction process through more rigorous terms and conditions or a robust legal framework. This will help prevent recurring issues of delayed or cancelled tenders and delayed payments for various stakeholders.
  • Establishing a nationwide policy and set of conditions for land acquisition for wind projects. Once an overarching fra­me­work is developed, it would help alleviate the obstacles of auctioning land for wind project development. Once im­ple­m­ented, this overarching framework wo­uld also prevent laws from being chan­g­ed retrospectively by government authorities.
  • In light of land availability and acquisition challenges, the government may wish to accelerate the opportunities for off­shore wind, with most technical re­sources concentrated off the coasts of Tamil Nadu and Gujarat.
  • Increasing coordination between strategic grid development and future energy generation plans, to streamline future grid connection planning for wind en­ergy projects. The planning timelines for grid connection should be aligned with the implementation of grid augmentation. The construction of additional substations should be prioritised to ensure that renewable energy can be integrated across different regions of the country.
  • The government can also explore technical improvements for forecasting and smart distribution, which can support grid balancing with a larger share of renewable energy.
  • Realigning public stimulus funding with energy and transition goals. While early measures were taken by the government to mitigate the impacts of Covid-19 on construction and supply chains of the renewable energy industry, most of the public stimulus spending is still di­rec­ted to the fossil fuel sector. Redirec­ting funds to the renewables sector now can help to close the gap between current installation rates and clean energy targets by 2030.
  • The Ministry of New and Renewable Energy should increase the number of grants for wind energy generation projects, grid development, and research and development to help stimulate the se­ctor further. For instance, repowering frameworks for the existing wind projects at sites with attractive resources sh­ould be developed, particularly as these sites are already in use and may face less friction around land acquisition and grid bottlenecks.
  • Increasing dialogue between author­ities and primary stakeholders and in­v­es­tors in the wind industry, especially in light of unclear procurement pipe­lines in the future.

Future outlook

In the business-as-usual (BAU) scenario, the re­port forecasts that almost 21.5 GW of wind capacity will be installed between 2022 and 2026. If green recovery is to be achieved, the report forecasts a fast ac­c­eleration of wind capacity from 2024 on­wards, which would result in almost 31.2 GW being installed between 2022 and 2026. This would result in a potential up­side of 9.7 GW of wind energy installed over a five-year period. The greatest di­ff­e­rence would be seen in 2026, and this trend is expected to continue past 2026.

In the BAU scenario, 565,000 direct and indirect full-time equivalent (FTE) job years would be created by wind energy in India between 2022 and 2026 in the development, construction and installation phase. In addition, 36,000 annual direct and indirect FTE job years would be created in O&M, and this would continue for the lifetime of the wind farms.

In the green recovery scenario, 795,000 direct and indirect FTE job years are ex­pec­ted to be created from wind energy in India between 2022 and 2026 in the de­velopment, construction and installation phases. In addition, 71,000 annual direct and indirect FTE job years are likely to be created in O&M, which will be continued for the lifetime of the wind farms.

There is a huge potential, upside of 1.1 million additional FTE job years created in a green recovery scenario. Between 2022 and 2026, $11 billion of direct and indirect gross value added would be created from installed wind power projects in the BAU scenario over the lifetime of the wind farms. Further, $18 billion of di­rect and indirect gross value added would be created from installed wind projects in India in the green recovery scenario over the lifetime of the wind farms during the same time period.

The article is an extract from the report “Capturing Green Recovery Opportunities from Wind Power in Developing Economies” by GWEC