Wind installations were flat in India with 2.4 GW of wind power capacity added in the calendar year (CY) 2019, compared to 2.3 GW 2018. The cumulative wind power installations stood at 37.5 GW at the end of 2019, according to the data from government agencies, compiled by Mercom India Research.

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 underwhelming as low bids and tariff caps have reduced participation of bidders resulting in under subscription in many of the tenders.

During Q1 2019, just 488 MW of wind was added but saw an increase of 52.2% in Q2 2019 with 742.5 MW. The rate of installation in Q3 dipped sharply by 24% to 562 MW. However, installations in Q4 2019 went up again in Q4 2019 with 575 MW.

For the past four years, from 2016 to 2019, the state of Tamil Nadu has been leading wind installer in the country. In 2016, the state’s wind capacity was 7.7 GW, which increased to 9.3 GW in 2019.

The second best state for wind power is Gujarat. In 2016, the state had installed 4.4 GW of wind projects, which rose to 7.5 MW by the end of 2019.

Recently, the Gujarat Electricity Regulatory Commission released a discussion paper to initiate the regulatory process for setting the wind power procurement tariff for the financial year.

The Commission has proposed to determine the tariff for all prospective wind projects based on the rates discovered through competitive bidding and discontinue the practice of setting the generic tariff for wind power projects.

Most of the wind potential exists in Andhra Pradesh, Gujarat, Tamil Nadu, Karnataka, Madhya Pradesh, Maharashtra, and Rajasthan.

“2019 was another weak year for the wind sector in India. Low tariff caps have made projects financially unattractive. Most of the wind resource rich sites are gone, and land for wind projects is difficult to come by. Windy states are also known for curtailment. The wind sector needs some fresh ideas and policies to get the momentum back going into 2020,” said Raj Prabhu, CEO of Mercom Capital Group.

Uncertainty in the wind sector increased, as the new government in Andhra Pradesh went ahead with its decision to renegotiate the Power Purchase Agreements (PPAs) for wind and solar power projects signed during the former Chief Minister Chandrababu Naidu’s tenure.

In 2019, almost 4.2 GW of tenders for wind projects were issued by Solar Energy Corporation of India (SECI) under the interstate transmission system (ISTS) VII, VIII, and IX. Out of this, 2.6 GW were auctioned.

Under the ISTS hybrid, SECI issued a cumulative capacity of 3.6 GW of wind projects under Tranche I to Tranche III. Out of this, 1.56 GW was auctioned under ISTS-hybrid Tranche I and Tranche II.

A senior executive at a large wind developer told Mercom that until 2016-17, feed-in-tariff led the rise of wind installations.

“Later, the government released competitive bidding guidelines. It was during this time that we saw quite a few SECI tenders for wind projects. Developers and investors were interested mostly in SECI tenders due to its financial security. Except for Gujarat and Maharashtra, not many states received good responses from the developers,” he added.

Referring to 2019, the senior executive added that there were a few tenders from the government received a lukewarm response from developers, and there were also delays in signing the power purchase agreements (PPA) from the distribution companies. Land acquisition and evacuation are also an issue for further development of such projects.

Talking about projections for 2020, he said, “In the short-term, the growth of wind installations will depend on the economic situation of the country. But for the medium to long-term, if the economic situation improves, it will be a positive sign for the industry as well.”

In December last year, Mercom reported that India’s wind sector failed to gather speed in 2019. The wind energy sector, along with the rest of the renewable energy industry, has been facing multiple challenges on various fronts over the past few years, and 2019 was no different. The sector was grappling with the slowing economy, low tariffs, tariff caps, curtailment, infrastructure constraints, and a plethora of duties and tariffs.