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The Wind Beneath India’s Renewable Energy Wings

‘India will certainly overachieve its wind target.’

22/05/2017 8:36 AM IST | Updated 22/05/2017 8:36 AM IST

Already accounting for 9% of India's total installed energy capacity, wind power looks to add another 6GW this year, an unprecedented expansion that will help the country overshoot its Paris climate pact commitment.

LM Wind Power
Wind energy has come of age in India.

The mood was buoyant at the recently held Windergy India 2017 conference in New Delhi. Industry leaders, regulators and government officials were unanimous in predicting a bright outlook for the wind power sector that has been growing at a breakneck speed in recent times.

The importance of the Indian wind market was underlined by the fact that the Global Wind Energy Council (GWEC), which represents the industry worldwide, chose to launch its Global Wind Report 2016 at the Delhi pow-wow. A widely used source of data, the report in its five-year market forecast painted a rosy picture of the Indian scenario.

India has set a new national record with 3.6GW of new installations, pushing it into fourth place in terms of annual capacity growth...

India has set a new national record with 3.6GW of new installations, pushing it into fourth place in terms of annual capacity growth, and cementing its fourth place position in cumulative terms, after China, the US and Germany, GWEC's annual report said. For the eighth year in a row, Asia was the world's largest regional market for new wind power development in 2016, with capacity additions totalling just over 27.7GW.

"Wind power is now successfully competing with heavily subsidised incumbents across the globe, building new industries, creating hundreds of thousands of jobs and leading the way towards a clean energy future," GWEC secretary-general Steve Sawyer said in a statement. "We are well into a period of disruptive change, moving away from power systems centred on a few large, polluting plants towards markets increasingly dominated by a range of widely distributed renewable energy sources." See: Renewables drive creative destruction of energy landscape

Rapid growth

India aims to build wind farms and installations to add at least 6GW of capacity every year for the next five years, a high pace of growth that looks possible because of recent investor interest and the emerging change in tariff regime in the wind sector. See: Strong tailwind powers bids for new wind farms

"India will certainly overachieve its wind target," Gireesh B. Pradhan, chairperson and chief executive, Central Electricity Regulatory Commission, said at the Windergy conference. "The performance of the wind sector has been spectacular."

The country will auction projects to install 6GW of wind power this year, according to Rajeev Kapoor, Secretary, Ministry of New and Renewable Energy (MNRE). Out of this, the state-owned Solar Energy Corporation of India Ltd (SECI) will auction 2GW within a month, Kapoor said.

India's first ever wind power auction, held this February, saw a record low tariff of ₹3.46 (US$0.05) per kWh, a significant fall compared to previous rates of ₹4-6. India continued to be the second-largest wind market in Asia, offering ample prospects for both international and domestic players, the GWEC report said.

"The Indian wind market is now fully mature. We will reach 175GW renewable capacity by 2022, out of which 60GW will be contributed by wind power," said Tulsi R. Tanti, chairperson and managing director of Suzlon Group, the country's top wind turbine maker. "With the right incentives, the industry is capable of adding as much as 10GW in installed capacity every year."

Overshooting Paris pledge

India has been making fast progress in the renewable energy sector. It intends to generate as much as 56.5% of its electricity from non-fossil fuel sources by 2027, the government has estimated in its energy plan. This puts India far ahead of its Paris commitment of meeting 40% of its energy needs from non-fossil fuel electricity sources by 2030. See:Renewables sprint ahead of Paris pledge

Among renewables, wind power accounted for over 57% of India's installed capacity, GWEC said. India's wind power installations accounted for a 6.6% share of the global market in 2016. Wind power capacity accounted for over 9.1% of total domestic installed capacity, according to India's Central Electricity Authority.

The Indian wind market is now fully mature. We will reach 175GW renewable capacity by 2022, out of which 60GW will be contributed by wind power. Tulsi R. Tanti, chairperson, Suzlon Group

In 2016, the majority of wind farms have come up in the windy states of Rajasthan, Madhya Pradesh, Maharashtra and Andhra Pradesh. These projects were built by large independent power producers such as Renew Power, Hero Future, Continuum, Orange, Mytrah and Oriental Green Power.

However, there might be some bumps in the immediate short term as the market transitions from the regime of feed-in tariff to a system of auctions where the lowest bidder wins, some industry leaders said. Feed-in tariffs typically mean long-term contracts and guaranteed pricing tied to costs of production for renewable energy producers that the government offers to cover risks and encourage investment.

"The industry needs further clarity in policy, particularly at the state level," cautioned Sumant Sinha, chairperson and managing director, ReNew Power Ventures. "Unless the challenges thrown up by this stage of transition are met, capacity installation (in the near term) may fall off a cliff."

Sinha however said that payments from distribution utilities are improving. Delayed payments from stressed power distribution utilities have been a pain point for renewable projects. Most of the distributors are also unable to comply with the national renewable purchase obligation announced in 2016.

Green corridor

Integrating with the electricity grid has always been a challenge for renewable energy. To address this, the government has initiated a programme facilitate interstate transmission. The government's Green Energy Corridor initiative to facilitate the transfer of power from the high renewable energy installation states to other parts of the country is also progressing quite well, according to Indian Wind Turbine Manufacturing Association (IWTMA).

The industry lobby group said that although 28 states and union territories have a defined RPO for renewables, the renewable energy certificate framework linked to the RPO, which was introduced for inter-state purchase and sale of renewables-based power, has not been a great success. This is largely due to the non-compliance and weak enforcement of the RPO by the states and market regulators, IWTMA said in its latest outlook.

This report was first published at India Climate Dialogue.

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