The installations of wind power projects in India has decelerated, with only 2.3 GW installed in 2019, according to the Global Wind Energy Council (GWEC).

“That is around half of the 4.1 GW of volume installed in 2017 and reflects slow execution when held against the 12 GW of capacity awarded in central and state tenders since 2017,” states GWEC.

India is the world’s fourth-largest onshore wind market by installations, with 37.5 GW of capacity as of 2019. GWEC has pointed out that India’s wind sector and installations have been traditionally erratic and highly sensitive to policy changes. Further, it states that after the introduction of central auctions, which transformed the wind procurement mechanism in the country, the market entered a state of limbo.

Previously, it analyzed the factors that led to a dip in the growth of India’s wind sector in the past two years.

GWEC has also listed seven key characteristics of the wind market in India:

• The market will be inherently large and lumpy in installations
• The demand is strong, and economics support wind capacity
• The activity is muted in the market
• The current orders are over 8 GW in the project pipeline
• The issues choking actualization of existing and creation of a new pipeline
• The government is actively resolving issues
• The growth is likely to be lopsided.

The report noted that the Indian wind market has conventionally had fluctuating capacity additions, being highly sensitive to policy changes. Nearly 13 GW is expected to be installed in the next three years; however, the deployment will be unevenly distributed across years, geographies, and the market mechanism.

The demand for wind originates from non-RPO compliance by state DISCOMs, underlined GWEC. Nearly ~20 GW of demand exists in the market in terms of unfulfilled non-solar RPOs towards 2022. Economically, as well, wind auction bid prices are 30-40% lower than the average pooled power procurement cost (APPC) for the majority of states in India. So, demand and price are the fundamental drivers of wind support in India, added the report.

According to GWEC, although the tenders in 2017-18 were oversubscribed, in 2019, tenders couldn’t get much interest.

Wind installations levels have significantly declined after the reverse auction mechanism was introduced in the wind sector after several years of growth. Before the auctions were introduced, wind projects were mostly developed by private companies for captive consumption or sale to the state. But all of this changed in 2017 when the reverse auction was introduced. The growth after the introduction of auctions has been disappointing as low bids and tariff caps have reduced participation of bidders resulting in under subscription in many of the tenders.

Several factors have led to the decline in the activity in this sector, including issues in the grid, land availability, payment delays for renewable projects, and a slowdown in the signing of power supply agreements. Furthermore, pricing expectations have remained aggressive. “The half-hearted attempts of state markets to revive demand and conduct auctions have largely been unsuccessful,” according to the report.

As reported previously by Mercom, delay in the availability of land, grid curtailment, and issues in timely payments continue to drag on the existing wind pipeline.

Despite low uptake in the latest auctions, nearly 8.6 GW of active orders can be seen in India, said GWEC. The majority of the orders are from the 8-9 central auctions conducted between 2017-2019, while states contribute less than 11% of the active orders, given the low auctioning activity. Out of 8.6 GW, 3 GW is scheduled for commissioning in 2020, 5.2 GW in 2021, and 0.4 GW in 2022.

It added that the government is also planning a 25 GW plug-and-play wind park for wind capacity to resolve issues of land and grid and provide long-term volume visibility.

However, it states that the growth will be lopsided, primarily because the government’s resolutions came in late, as the outcome of projects scheduled for commissioning in 2020 and 2021 has been largely decided.

“These projects will be impacted by the fault-lines that started emerging in 2017 around grid, land, aggressive pricing, financing and sales agreements,” GWEC added.

GWEC had earlier forecasted that the total cumulative installations are expected to reach 50 GW in 2020-21.