According to ICRA, the wind power sector is facing substantial challenges because of delays in making payments by the state distribution utilities and implementation delays being faced by the projects
January 29, 2020. By News Bureau
Wind energy capacity addition is expected to be restrained this financial year amid challenges like payment delays from discoms and a taut financing environment, an ICRA report said. Though on a year-on-year basis, capacity addition is expected to develop to about 2.5 GW in FY2020, from 1.6 GW in FY2019, accomplishing the 60 GW target set by the government by December 2022, remains a task, the report said.
"In this context, ICRA has lately reviewed the outlook for the wind energy sector from stable to negative," an ICRA statement said.
According to ICRA, the wind power sector is facing substantial challenges because of delays in making payments by the state distribution utilities and implementation delays being faced by the projects.
This apart, the tariff ambiguity for the wind power projects in Andhra Pradesh has affected investor sentiments in the sector. This is also echoed in the slowdown in the tendering activity of wind power projects by 67 per cent to 2.3 GW in CY2019 from 6.9 GW in CY2018.
Furthermore, many of the bids called by central nodal agencies remained under-subscribed, it added.
"Against the 5 GW to be commissioned as of December 2019, as per the timelines provided under the bids awarded by the Solar Energy Corporation of India (SECI), NTPC and state utilities, only about 2 GW is estimated to have been commissioned," said Girish kumar Kadam, Sector Head & Vice President - Corporate ratings, ICRA.
Additionally, the actual execution on ground has been hampered by delays in completion of land acquisition, securing transmission connectivity for inter-state projects, financing challenges due to concerns over bid tariff viability and delays in approval for tariff adoption from the regulators.
Further, the bid tariff discovered in the recent wind power auctions continue to remain at less than Rs 3 per unit and highly competitive against the conventional energy sources, it added.
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