The Global Wind Energy Council (GWEC) and MEC Intelligence (MEC+) have jointly released the ‘India Wind Energy Market Outlook 2025’ report, which predicts that the world’s fourth-largest wind power market will add nearly 20.2 GW of new wind power capacity between 2021-2025.

The capacity addition would increase India’s existing 39.2 GW wind market by 50%, paving the way for growth after recent years of slowdown.

GWEC and MEC+ had forecasted 2020 to be a break-out year for Indian wind power, backed by a large pipeline and multiple policy interventions to ease bottlenecks. However, the Covid-19 pandemic’s impact was much more severe than anticipated.

As a result, instead of meeting the projected 3.3 GW of wind power in 2020, India managed to install 1.1 GW. The remaining capacity was pushed into 2021 or dropped by developers.

Turning towards hybrid

The market is set to bounce back with nearly 20.2 GW installed wind power capacity between 2021-2025, especially with wind-solar-hybrid projects. As a result, policymakers have started experimenting with multiple formats of hybrid projects to explore the viability of large-scale wind and solar projects.

The report has observed procurement in all three market segments – central, state, and corporate market for new hybrid projects. India had awarded 0.97 GW of new capacity in standalone tender and around 2.3 GW of wind capacity in the wind-solar hybrid, peak-power, and round-the-clock (RTC) formats at continuously attractive prices.

At present, India has a pipeline of 10.3 GW in central and state tenders, which are expected to drive installations until 2023. The market after 2023 is expected to be driven by around 10 GW of new capacity awarded to wind projects, mainly through hybrid projects, which are becoming increasingly important for the country’s RTC power initiative.

Three scenarios for wind installations in 2021-2025

Based on the most recent data, the report maps out three scenarios for wind installations in 2021-2025.

In the current scenario, India is expected to install nearly 20.2 GW of wind capacity in 2021-25, 90% of which will come from central tenders, followed by corporate procurement and state markets.

In the conservative scenario, the net volume of installation can dip to 14.8 GW if the existing pipeline of projects shrinks and new auctions are limited or sporadic. The ongoing Covid-19 crisis in India is likely to keep forecasts closer to a conservative scenario.

Under the ambitious scenario, nearly 24.4 GW capacity could be installed in the next five years, driven mostly by high demand for price-competitive hybrid auction pan-India and, to some extent, by complete actualization of the current pipeline.

Corporate procurement

Corporate procurement of renewable energy remains a huge potential but untapped market in India.

The corporate procurement market for renewables has started to pick up in India, driven by wind and solar cost competitiveness compared to DISCOM supply. Corporate power purchase agreements (PPAs) supply nearly 39% of the commercial and industrial (C&I) demand in India; however, less than 10% of it is from renewables.

As of date, 9 GW of wind and 8.1 GW of solar (including rooftop installations) were installed under the C&I procurement category.

In a webinar hosted last year by GWEC, which discussed the scenario and scope of adoption of renewable energy by India’s corporate sector, ReNew Power’s Mayank Bansal had stated that corporate businesses consume almost 50% of the country’s energy generation and that there is a scope of 25 GW of renewable energy adoption by them by the end of 2023.

However, solar alone will fail to meet the multi-GW opportunity in the future, and wind development will be crucial to meet the larger sustainability goals, alongside the power demand of corporates.

The corporate market is expected to contribute 0.85 to 1.7 GW of wind installations in the next five years; however, it can open to be a multi-GW opportunity pushed by long-term reforms easing the approvals and procurement mechanism.

Long-term growth

Post-2025, the market offers multiple green avenues, including those of offshore wind, repowering, and developing India as a wind export hub, as well as the largely untapped potential of the largest C&I consumers in India.

In the long term, new opportunities such as repowering, hybrid projects, offshore wind, and corporate PPA’s can help scale up India’s wind power capacity and deliver affordable, clean energy across the country.

The government and industry need to work hand-in-hand to unlock the full potential of wind energy. The government can strengthen consensus and coordination among agencies with a consistent and aligned market roadmap, clarifying volumes, frequency, and composition of new tenders.

Greater coordination between central and state governments around wind targets, supply chain utilization, and the definition of a clear market roadmap are some of the key actions needed to put India on a pathway to meet its decarbonization and renewable energy goals.

Additionally, promoting technology exchange and alignment with the global supply chain can create export-oriented opportunities for the Indian manufacturing base.

Last year the GWEC had raised doubts about India meeting its offshore and onshore wind energy targets by 2022.

The current report, however, states that despite the short-term drop in India’s energy demand brought by the Covid-19 crisis, the long-term drivers of energy demand and growth remain intact. Year-on-year electricity demand declined by 8% between 2019 and 2020 in India due to the impact of the global pandemic and subsequent economic slowdown. However, long-term projections towards 2025 foresee a recovery of energy demand, expected to increase by 3% in the conservative case and as much as 18% in the ambitious case in the next five years.