Tailwinds for wind power

Amidst challenges, the government target of 60 GW wind energy is not a distant dream

The central government has positioned comprehensive guidelines for wind power generators to fill in loopholes in contracts, decrease disputes and help attain its ambitious target of generating 60,000 MW of power from the renewable energy source.

India with an installed wind power capacity of 32.7 GW moves to an auction-based bid out for superior price discovery, for many developers it is a case of recall as the financial feasibility of the projects yet again comes to the fore just as they did during the competitive solar bids of 2016-17.

The dip in commissioning and allotment of new projects in 2017 was only due to the alteration in project allocation process from the former ‘feed-in tariff’ (FiT) regime — in which power regulators of the eight main wind energy producing states set their individual tariffs — to the auction regime in which the tariff is discovered at each auction through a bidding process.

The sharp slump in tariffs across all the four wind auctions of 2017 is also likely to make the industry’s recuperation more difficult. From a FiT regime of ` 4-6 per unit, the lowest tariff fell to ` 3.46 per unit in SECI’s first wind auction, to ` 3.42 per unit in the Tamil Nadu auction, to ` 2.64 per unit in SECI’s second auction to ` 2.43 per unit in the Gujarat auction.

Unlike in the case of solar tariffs which fell due to a decline in the prices of solar panels and modules, the cost of wind turbines and associated equipment has not reduced substantially.

Tailwinds for wind power sector in 2018-19:
Tulsi Tanti, CMD, Suzlon Group and Chairman, IWTMA says, “Renewables will play a critical role in India’s energy basket to ensure long-term energy security of the country, enabled by rapidly evolving technology, cost competitiveness of renewables and favourable policy reforms.

The government target of 175 GW by 2022, comprising of 60 GW wind energy is not a distant dream. With cumulative wind additions reaching 32 GW, installations are much ahead of the 30 GW target set by government until FY17. The domestic wind market is on a growth path in the competitive bidding regime and there is an increased demand for clean energy, which has now become a reliable, affordable and mainstream source of energy, he adds.

There is a clear visibility of continuous volumes in the coming years, with volumes set to grow exponentially with 10-12 GW auctions each year from SECI and state bids combined, as well as from projects less than 25 MW based on a determined tariff. In FY18, the wind industry witnessed a transition from the Feed-in-Tariff (FiT) to the competitive bidding regime; hence there was a temporary drop in volumes, states Tanti.

UB Reddy, Managing Director, Enerfra Projects (India) Pvt. Ltd says, “The wind power sector will have tailwinds in 2018-19. Between Feb 2017 and Apr 2018, India has auctioned over 10 GW of capacity. This is an unprecedented figure. A lot of this capacity will be commissioned in 2018-19, and we expect the backlog to provide tailwinds into 2019-20.”

Dr Sanjiv Kawishwar, Sr. Vice President, ReGen Powertech Private Limited says, “Wind energy sector faced huge ups and downs in the previous year after adoption of reverse bidding mechanism to determine wind tariff. Everyone expect that wind energy market will flourish according to government plans in order to achieve 60GW by the year 2022 and therefore there will be better opportunities in the market to grow exponentially from 2019 onwards.”

Tariff per unit (kwh) of electricity paid to generator has increased significantly in the last competitive bidding session compared to earlier bidding sessions and therefore there is a ray of hope in the wind energy sector and therefore we are expecting tailwinds.

Wind specialists anticipate that already auctioned wind projects will be implemented completely in this financial year and therefore there will be tailwinds in 2018 – 2019. India proposed and set a total target of 175 GW generation of electricity from renewable energy sources in 2022 in which Wind energy contribution will be over 60GW.

Many still believe that the damage inflicted in 2017 has been so severe that a recovery seems unlikely; however, there is a fair amount of visibility about megawatts that will be auctioned in 2018. It adversely affected the families of those ‘who lost their jobs and also the vendors who supply components / services to wind turbine manufacturers or wind project. Due to the redesigned project allocation procedure from ‘feed-in tariff’ (FiT) regime to competitive bidding process, ‘unhappy transition’ held in allotment of new projects in 2017 due to absence of appropriate guidelines and rules”, comments Kawishwar.

Driving the growth
Tulsi Tanti says, “Wind energy has entered an exciting new phase and its growth is unstoppable. Once considered a niche industry dependent on government subsidies, today it is driven largely by economic realities, improved reliability and cost competitiveness backed by proven technology. Another advantage of renewables is that it is modular in nature and is scalable. We are confident that the evolving technology and economic viability of energy storage solutions, will give further impetus to renewables.

India’s coastline of 7,600 kilometres (kms) provides enormous potential for offshore wind energy and India can potentially repeat the success achieved in onshore wind energy. The Ministry of New and Renewable Energy (MNRE) plans to auction 5 GW offshore wind energy power projects in CY 2018.

Repowering of ageing low capacity wind turbines with the latest technology is also an opportunity to be unlocked. India has significant potential for repowering especially in the states of Maharashtra, Gujarat and Tamil Nadu which have been early adopters of wind energy. Over 3 GW of ageing turbines are located in high wind potential sites and can be repowered with upgraded technology to maximise energy generation, he adds.

Technology and innovation will remain the catalyst that will drive growth in the renewable energy sector. Digitalisation of services, innovation in tower and blade technologies aimed towards making unviable wind sites viable, ensuring better yield and increasing turbine utilisation will be the key focus areas. Digitalisation will enable maximising turbine efficiency and availability by leveraging the big data technologies. This will not only increase energy production at lower lifecycle cost, but also ensure greater transparency of performance parameters at all levels. It is a win-win situation for customers and wind farm operators due to enhanced revenue and reduced operations and maintenance cost.

The industry is now on a growth trajectory with a healthy order pipeline owing to auctions both at the central and state level. This has paved the way to unlock 300 GW wind energy potential in India and harness the latent potential of non-windy states. The canvas has expanded from nine wind-rich states to all 29 states in the country with waiver of Inter-State Transmission (ISTS) charges and losses of the electricity generated from solar and wind sources of energy by the power ministry, he states.

“The wind energy sector is scaling up to achieve nearly 10 GW per annum installation in the next four years. It is through technological innovation and the pursuit of sustainable social, economic and ecological development that we can chart the country’s path to progress and power a greener tomorrow,” comments Tanti.

Reddy says, “Much like other developed nations, the share of services in India’s GDP has grown over the last 20 years, from about 47-55 per cent. This trend is expected to continue. Service sector consumes less electricity to produce a unit of output, so growth in services will lead to kWh growth rate below GDP growth rate.”

India is also driving energy efficiency at an unprecedented rate, whether it is in LED lighting, agricultural pumps, efficiency standards for appliances, or measures taken by railways.

Finally, India is modernizing the grid and cutting down aggregate technical and commercial losses, with a goal to reach 15 per cent by March 2019.Loss reduction will help meet growth without corresponding increase in production.

After a terrible slowdown in 2017, the government is on track to meet 175 GW of renewable power by 2022, with 60 GW contribution by wind. Wind can certainly reach this figure considering that we are already at about 34.6 GW as of March 31, 2018. Grid evacuation capacity could be a constraint but both the central government and states seem committed to making large grid investments.

Solar will grow faster than wind. This is a healthy approach. Increase in solar will not impact wind. Having said this, India’s wind sector is mature and over 80 per cent of value-add in manufacturing is within India. On the other hand, India does not have a single facility to manufacture polysilicon and wafers for solar cells. This is a risk factor. In fact, wind can contribute more than 60 GW by 2022, permitting India to meet its 175 GW goal. Two key policy decisions will help growth in wind:

Minimise state permissions for central government auctions
Wind rights in many windy areas are tied up today by state nodal agencies in favor of various parties. Instead, MNRE should allow bidding in such areas and permit winning developers to acquire land from private parties. This will unlock wind potential in many promising sites.

Connection at 400 kV state sub-stations
For central government auctions, developers should be permitted to connect to state discom owned 400 kV sub-stations with waiver of ISTS charges. Rather than being limited to PGCIL sub-stations, this will increase the number of sub-stations where developers can evacuate power. This change will help both wind and solar.

To meet 60 GW target by March 2022, India needs to commission only about 25 GW wind over the next four years. This is an exciting target and the industry is ready to deliver this and more.

The industry is now on a growth trajectory with a healthy order pipeline owing to auctions both at the central and state level.
Tulsi Tanti, CMD, Suzlon Group & Chairman, IWTMA

With cumulative wind additions reaching 32 GW, installations are much ahead of the 30 GW target set by government until FY17.
Dr Sanjiv Kawishwar, Sr. Vice President, ReGen Powertech Private Limited