Energetica India - June 2020

WIND POWER The wind sector till 2016-17 was es- sentially led by turbine manufacturers, where the key incentives were acceler- ated depreciation and generation-based incentive. Following the success of a competitive bidding model in reducing solar tariffs, the same model brought about increased vigor in the wind sector initially which has seen some aggres- sive biddings. Wind tenders have seen a drastic drop in wind tariff to Rs 2.43 per unit, about Rs 2 to 3 lower than the pre- vailing FiT at the time. Problems started The change in model has not taken into account the ground realities, which start- ed affecting the wind sector. There is a persistent disconnect between emerg- ing project risks that are driving up costs and the expectation of states and dis- coms of the lowest possible tariffs by the imposition of tariff ceilings. This has dis- couraged the developers to participate in new tenders. The projects are facing severe developmental challenges. Wind projects require the characterization of site and data collection for long-term, the onus of which has been with the devel- opers. Developers are not facilitated to develop wind projects in different states - with different geographies and wind speeds - which is limiting the growth only to certain regions. Developers are also grappling with land and evacuation availability crunch. Meanwhile, RE developers are strug- gling with increasing risks due to the blatant disregard of discoms for signed power purchase agreements. Discoms currently owe nearly Rs. 10,000 crores to RE developers, risking the fate of in- stalled projects and hampering invest- ments in new ones. Wind developers are also facing higher grid curtailment risk due to variable & seasonal nature of generation, despite the accorded ‘must- run’ status. Such operational challenges are risking the already installed projects, creating financial risks and reducing li - quidity in the market, making it a vicious circle which reduces the prospects of the sector and certainly put a question mark on the achievability of the target. Announced tenders are thus increasing- ly meeting with an underwhelming re- sponse.In 2019 so far, 8.8-GW has been announced for tendering but only 3.5- GW has been awarded (see Graph 3). Slump in capacity addition since 2016-17 Graph 2: Capacity addition and total installations of Wind Energy in India *Till December Source: MNRE 46 energetica INDIA- June_2020