India had a record year and is now the fourth largest market globally both in terms of cumulative capacity and annual additions last year. 5,400 MW of new wind power was added to reach a total of 32,380 MW at the end of March 2017.
The total renewable energy capacity installed in the country crossed the 50 GW mark at the end of 2016. Among renewables, wind power accounted for over 57 percent of the installed capacity.
India’s wind power installations accounted for a 6.6 percent share of the global market in 2016. Wind power capacity accounted for over 9.1 percent of total domestic installed capacity.
In February 2015, India committed to installing 60 GW of Wind and 100 GW of solar by 2022. Further, India made a commitment at COP21 to raise the share of non-fossil-fuel power capacity in the country’s power mix to 40% by 2030.
India – Cumulative Wind Power Installatiion up to March 2017 (MW)
WIND MARKET IN 2016
In 2016, the majority of wind farms have come up in the States of Rajasthan, Madhya Pradesh, Maharashtra and Andhra Pradesh. These projects were built by large IPPs such as Renew Power, Hero Future, Continuum, Orange, Mytrah, Oriental Green Power and others.
During 2016 wind power development grew at a strong pace. Wind power producers opted for the tax-based AD incentive (originally 80 percent depreciation in the fi rst year of installation) or the GBI of INR 0.5/kWh for at least four years and up to ten years. The AD will be available at a reduced rate of 40 percent from April 2017 and the GBI could be discontinued.
The top-five OEMs in India are Suzlon (35.4%), WindWorld (18%), Gamesa (10.1%), Vestas (7.6%) and Regen (7.3%). LM Wind Power set up its second blade factory in Vadodra, Gujarat. Senvion, an established European player, started up its operations in India and acquired the Kenersys manufacturing facility. Gamesa set up new factory at Nellore in Andhra Pradesh, Acciona entered the market last year, and Envision and Sany Global are expected to enter the market soon. The current manufacturing capacity in the country is around 9,500 MW.
Support framework for wind energy
28 states and union territories have defined a Renewable Purchase Obligation (RPO) for renewables. However, the renewable energy certifi cate (REC) framework linked to the RPO, which was introduced for inter-state purchase and sale of renewables-based power, has not been a success. This is largely due to the non-compliance and weak enforcement of the RPO by the states and market regulators.
Wind power producers can either opt for preferential tariffs decided by the state regulator, or tradable certifi cates to add to the average power purchase price from the utility.
LATEST POLICY DEVELOPMENTS
The State Electricity Regulatory Commissions determine the tariff for wind projects. However, the Central Electricity Regulatory Commission comes up every year with a tariff guideline for the entire country based on wind power density in fi ve zones. To address grid integration challenges, the government has initiated the Green Corridor programme. The objective is to improve linkage between India’s regional grids with its national grid. This will facilitate interstate transmission.
The government’s ‘Green Energy Corridor’ initiative to acilitate the transfer of power from the high renewable energy installation states to other parts of the country, consists of 765 kV and 400 kV high voltage transmission lines and an associated 765/400kV substation and associated equipment; and four HVDC terminals (two at 800 kV and two at 320 kV) as part of the increased inter-regional connectivity between India’s western and southern regional power grids.
2016 saw a number of new policies for promoting wind power including the draft ‘wind-solar hybrid policy’, Guidelines for Development of Onshore Wind Projects, Guidelines for Prototype Wind turbines, and the Proposal for Evaluation of Small Wind Energy and Hybrid Projects.
Further, in November 2016, the Ministry of New and Renewable Energy (MNRE) issued Guidelines for a transparent bidding process for 1000 MW of wind, to be connected to the interstate transmission system. The results were announced in March 2017.
BARRIERS TO WIND ENERGY DEVELOPMENT
Most of the state level power sector utilities in India suffer from poor financial health and are unable to comply with the National RPO announced in 2016. Delayed payments by certain state DISCOMs is also an on-going concern.
The high cost of finance remains a challenge. High interest rates and limited availability of debt financing are challenges for developers as well as OEMs in the country.
OUTLOOK FOR 2017 AND BEYOND
The government, in its latest budget announcement for FY 2016-17, has reduced the AD from 80% to 40%. Furthermore, the Generation Based Incentive will come to an end at the end of the 2016/17 financial-year in India. These two factors will likely contribute to a rush of installations at the end of the 2016-17 fiscal year. However, the first auctions for wind power were held in early 2017 successfully. We expect installations during 2017 to reach approximately 4,000 MW.
The Government of India has announced a laudable Renewable Energy target of 175GW by 2022 out of which 60GW will be coming from wind power. The Wind Potential in India was first estimated by National Institute of Wind Energy (NIWE) at 50m hub-height i.e. 49 GW but according to the survey at 80m hub height, the potential grows as much as 102 GW. Further a new study by NIWE at 100m height has estimated a potential 302GW.
One of the major advantages of wind energy is its inherent strength to support rural employment and uplift of rural economy. Further, unlike all other sources of power, wind energy does not consume any water-which in itself will become a scarce commodity.
Overall the future of Wind Energy in India is bright as energy security and self-sufficiency is identified as the major driver. The biggest advantage with wind energy is that the fuel is free, and also it doesn’t produce CO2 emission. Wind farm can be built reasonably fast, the wind farm land can be used for farming as well thus serving dual purpose, and it is cost-effective as compare to other forms of renewable energy. (Numerical Data Source: CEA, NIWE, MNRE)