A green zone analysis on the wind energy power generation and consumption scenario in India
Ministry of New & Renewable Energy has set 5 GW target for medium and long-term offshore wind energy by 2022 and 30 GW by 2030. The escalation of target has been initiated to encourage confidence and set the momentum in the industry. At present, the country’s installed wind energy capacity is at 34.04 GW.
The target set for offshore wind power is judicious in comparison to on-shore wind target of 60 GW and its accomplishment of 34 GW and solar target of 100 GW by 2022. This is largely because of challenges considering the difficulties in installing large wind power turbines in open seas, offshore wind power turbines in open seas, and offshore wind turbines of much larger dimensions and capacities than onshore turbines.
Globally the installation capacity of off-shore wind power is about 17 GW to 18 GW. It led by countries such as UK, Germany, Denmark, Netherlands & China. Recent years have witnessed fall in off-shore wind tariff in some of these markets.
Industry’s view on MNRE’s 30 GW offshore wind energy target by 2030
UB Reddy, Managing Director, Enerfra Projects (India) Pvt. Ltd is of the opinion,” In 2017, the world saw an addition of 3.3 GW of offshore wind, bringing the total to 17 GW as of Dec 31, 2017. Europe accounts for 93 per cent of this capacity, with UK and Germany in the lead. Further, the economics of offshore wind have improved significantly, with European auctions in 2017 seeing prices equivalent to 4 to 5.5/kWh. As with onshore wind, the industry continues to increase tower height and blade diameter. MHI Vestas announced a production ready V164-9.5 MW machine in May and GE has announced work on Halide platform with a 220m diameter and 12 MW per turbine.”
The global push towards offshore wind is driven by higher speeds and smoother wind, along with reduction in cost of platforms which has benefited from advances in the oil and gas industry.
“Facilitating Offshore Wind in India (FOWIND) reported Gujarat and Tamil Nadu, as the two most promising states for offshore wind, and a scenario with 500 MW capacity by 2022, 2.5 GW by 2027, and 5 GW by 2032. However, in June 2018, MNRE announced ambitious targets of 5 GW by 2022, and 30 GW by 2030. The recent Expression of Interest (EoI) by NIWE has drawn 35 responses, including both global and Indian companies,” Reddy adds further.
The largest number of offshore turbines in the world is in the North Sea. Based on the data tracked over multiple years, the average wind speed there is 9.8 to 10.2 m/s. Reddy says,” For India, there is no wind mast data from offshore locations. FOWIND and NIWE estimates put the speed at 7 to 8.2 m/s at 120m. Considering that energy availability is proportional to the cube of wind speed, this indicates 50-65 per cent less energy availability in India vs. North Sea. In fact, there are many onshore locations in India that offer similar or better speeds.
We will have better offshore wind estimates once NIWE has more data, but the fact remains that offshore speeds in India are materially lower than in other large scale offshore locations in the world.”
Levelised Cost of Ownership (LCOE)
Offshore capex everywhere is materially higher than onshore. The current lowest global figures are about € 2 million or 15-16 crore/MW. This figure will continue to decline. However, unless offshore speeds in India are materially higher, for the foreseeable future, we cannot expect auction prices anywhere near the 4 to 5.5/kWh figures achieved globally.
Even if India could come down to an optimistic 6 or 8/kWh, it is doubtful there will be any buyer with an appetite to sign a 25 year PPA at this price.
In Gujarat, Tamil Nadu, and other coastal locations, India has significant fishing activity. Wind farm areas need to be restricted due to high voltage cables on the seabed. Some coastal areas also have defense security concerns. While these issues can be managed, they will restrict the areas where offshore wind turbines can be placed.
Tulsi Tanti, Founder- CMD, Suzlon Group opines that, “Given India’s coastline of 7,600 km, the country has enormous potential for offshore wind energy and it can potentially repeat the success achieved in onshore wind energy. The government is keen on promoting clean energy and has identified Tamil Nadu and Gujarat to implement offshore wind energy projects. We believe with the right policy framework and ecosystem in India, this ambitious target in achievable, Tanti further adds.
According to Enerfra Projects (India) Pvt. Ltd, the following approach can assist the government and the industry together towards a sustainable realistic generation target:
Help reduce the cost and uncertainty of offshore wind
Current wind data is unlikely to satisfy the lenders for offshore projects in India. NIWE is already doing a good job in helping to address wind speed measurements. We may want to wait until there is a bankable data of sufficient duration before conducting auctions. The government can also help by providing evacuation relatively close to the landing location.
Announce the premium for offshore wind
Everyone expects that offshore wind today is more expensive than onshore wind. However, there may be a gap in expectations between a) the parties that responded to the NIWE expression of interest and b) MNRE, which will approve the final auction tariff and needs to convince buyers to sign PPAs. For example, after we have good quality wind data, if MNRE feels that 5/kWh is a reasonable upper limit to find buyers with PPA, it may be a good idea to gauge the response of the industry. The size of the initial offshore wind farm can be adjusted to ensure the total premium outlay is within MNRE expectations.
“In summary, offshore is a growing market globally and is worth considering in India. However, based on current data, offshore wind speeds in India do not seem to offer a material advantage to offset the higher cost. We need to focus on collecting bankable wind data of sufficient duration. We then need to do a realistic assessment of the price at which we can find buyers for offshore wind, vs. investor expectations. This approach will help set realistic targets for offshore wind in India,” adds Reddy.