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The Global Wind Energy Council (<a href="https://gwec.net/" target="_blank" rel="noopener noreferrer">GWEC</a>) and MEC+ (MEC Intelligence) have come up with a report which says that India’s wind capacity can only reach 50 GW by 2022.
The report analyzes the factors that have led to a slump in the growth of India’s wind sector in the past two years. The report also delves into the challenges that must be overcome to restore the growth of the wind sector in India.
According to the report, India is the world’s fourth-largest onshore wind market by installations with a total capacity of 37.5 GW as of 2019. With the energy demands set to rise in the coming years, the Indian government has set a target of 175 GW of renewable energy by 2022, out of which 60 GW is the goal set for wind energy.
The target might not be that far-fetched as wind is the second most competitive power source after solar at ₹2.81 (~$0.038)/kWh and is priced nearly 35% lower compared to conventional fuels. But the wind’s journey so far has not been so smooth.
Mercom previously reported that wind installations in India totaled <a href="https://mercomindia.com/2-07-wind-power-capacity-installed-india/" target="_blank" rel="noopener noreferrer">2.07 GW</a> in the financial year 2019-20, which was nearly half of the 4.1 GW capacity installed in 2017.
In addition to this, the seven states that manage wind procurement themselves, have seen a significant dip in activity, and orders by these states fell by 60% from 2017 to 2019. These seven states are Andhra Pradesh, Tamil Nadu, Karnataka, Rajasthan, Maharashtra, Madhya Pradesh, and Gujarat.
The report further adds that the market is going to continue in the same direction for the next three years, adding a total of 11-17 GW of wind power to the installed capacity. The ongoing COVID-19 pandemic has also affected the wind sector, and installations are bound to take a hit. According to the report, nearly, 0.7-1.1 GW of projects due to be commissioned in 2020 may shift to 2021, which brings down the forecast for the year 2020 to 2.2-2.6 GW from 3.3 GW earlier. The report says that a delay in new tenders in 2020 could lower total forecast installations to 11.5-12 GW for the period until 2022 as compared to the 13 GW projections in the base case.
In April 2020, another <a href="https://gwec.net/" target="_blank" rel="noopener noreferrer">GWEC</a> <a href="https://mercomindia.com/indias-lockdown-hurts-wind-supply-globally/">report</a> analyzed how COVID-19 was impacting the global wind industry, including India. India is one of the world’s largest wind gearbox manufacturing bases with nearly 10 GW of annual output. “These disruptions, especially in February and March, have sent ripples across manufacturing hubs such as Europe, China, and the United States as wind turbines require multiple parts that are shipped from across the globe,” the report stated.
The report notes that the activity in the wind sector started to slow down over the past two years. In 2017-18, the auctions were oversubscribed, but things have taken a downturn since then, with 60-70% of volume unallocated in auctions last year. Out of the total capacity of 12 GW auctioned in the last three years, 80-85% have been delayed by 6-12 months.
According to Ben Blackwell, CEO at GWEC, “India has been one of the largest wind markets for many years, and the government has to put ambitious renewable energy targets to fulfill the growing energy demands, which is yet to double in the next ten years. Setting realistic prices, a faster build-out of grid infrastructure, ensuring market liquidity, and streamlining land allocation will be crucial to reviving auction appetite and execution of India’s pipeline of wind energy projects.”
The report estimates that India could install 11-17 GW between 2020 and 2022, taking the cumulative installations to 54 GW by 2022 in the best-case scenario. Around 80-85% of new installations are expected from central procurement in the next three years, according to the report.
According to the report, there are 26 evacuation substations in India, and most of the projects have moved toward the two substations at Bhuj in Gujarat and Tirunelvelli in Tamil Nadu. Out of the 26 substations for the evacuation of wind power, only six substations are viable for new projects, and out of the six, three substations are yet to be budgeted. The limited availability of additional substations is a significant hindrance for developers and has resulted in central auctions in 2020 to be under-subscribed.
Land policy changes have also affected the timelines and costs of projects awarded by the state governments. The state of Gujarat changed the land allocation policy, and this affected the central auctions in the state. The allocation of new land for wind projects was stopped in 2018, and a new policy for the allocation of land in designated wind parks was introduced in 2019. Because of the uncertainty of the allotment of lands, nearly 3.2 GW of projects is likely to relocate to private lands in Gujarat. Similarly, in Tamil Nadu, the introduction of the construction bill has increased the minimum land requirement for wind projects, and this will lead to a delay in acquiring land for wind projects.
According to the report, the biggest challenge for the state markets is the inability of the distribution companies (DISCOMs) to make timely payments. DISCOMs of seven states with wind resource has a total of ₹75 billion (~$1 billion) outstanding payments to all renewable generators.
<a href="https://mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19219" src="https://mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS.png" alt="RE Generators Face Delayed Payments from State DISCOMS" width="801" height="518" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS.png 801w, https://cms.mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS-300x194.png 300w, https://cms.mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS-768x497.png 768w, https://cms.mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS-650x420.png 650w, https://cms.mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS-624x404.png 624w, https://cms.mercomindia.com/wp-content/uploads/2020/05/RE-Generators-Face-Delayed-Payments-from-State-DISCOMS-600x388.png 600w" sizes="(max-width: 801px) 100vw, 801px" /></a>
Out of the three wind-rich states that have conducted the auctions, only Gujarat has been successful in pricing, and right now, it is the only state <a href="https://mercomindia.com/gujarat-asks-wind-developers-to-match-lowest-tariff-only-two-agree/" target="_blank" rel="noopener noreferrer">conducting its auctions</a>.
Notably, the Gujarat Electricity Regulatory Commission (<a href="http://demo.gercin.org/" target="_blank" rel="noopener noreferrer">GERC</a>) recently <a href="https://mercomindia.com/gujarat-removes-generic-tariff/" target="_blank" rel="noopener noreferrer">announced the tariff</a> framework for the procurement of wind power by distribution licensees. The Commission has decided that the tariff for all wind projects in the state will be determined through competitive bidding, doing away with the practice of generic tariffs.
The report noted that going forward, the wind power procurement in-state markets are expected to remain uncertain, and the new installations may vary from 1-2.5 GW in the next three years in the state markets.
According to the estimates projected by the report, India is expected to install nearly 13.1 GW of wind capacity by 2022. In the high case scenario, the installations will touch 16.7 GW, in the low case scenario, it will be around 10.8 GW. Considering all the factors, the report believes that 2020 is going to be a slow year for the wind sector. But things could improve in 2021, and it could further peak in 2022. The cumulative wind capacity by 2022 will be 50.6 GW as per the report, which can scale up to 54.2 GW in the best-case scenario and come down to 48.3 GW in the low case scenario.
<a href="https://mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19220" src="https://mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios.png" alt="Wind installation Forecast and Scenarios" width="803" height="591" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios.png 803w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios-300x221.png 300w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios-768x565.png 768w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios-650x478.png 650w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios-624x459.png 624w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Wind-installation-Forecast-and-Scenarios-600x442.png 600w" sizes="(max-width: 803px) 100vw, 803px" /></a>
To give the necessary impetus to renewable energy, the Solar Energy Corporation of India (SECI) has started conducting <a href="https://mercomindia.com/seci-extends-submission-deadline/" target="_blank" rel="noopener noreferrer">hybrid auctions</a>. According to the report, as of 2019, nearly 1.6 GW of renewable energy has been awarded in the first two auctions. Ultra -mega renewable energy parks are also being set up to promote renewable energy. The state of Gujarat has marked nearly 30 GW of a separate area for wind projects.
In February this year, the National Institute of Wind Energy (<a href="https://niwe.res.in/" target="_blank" rel="noopener noreferrer">NIWE</a>) <a href="https://mercomindia.com/india-cultivable-land-wind-generation/" target="_blank" rel="noopener noreferrer">stated</a> that the installable wind potential of the country is estimated to be at 695 GW at 120 meters above ground level.
Out of the estimated figure, nearly 347 GW of wind projects can be installed on cultivable lands, followed by wastelands where 340 GW capacity could be possible.
Earlier, Mercom had <a href="https://mercomindia.com/2-07-wind-power-capacity-installed-india/" target="_blank" rel="noopener noreferrer">reported</a> that the Indian wind industry failed to gather momentum in 2019. The industry is still grappling with the slowing economy, low tariffs, tariff caps, curtailment, infrastructure constraints, and a plethora of duties and tariffs, which has stalled the growth of the sector.
Wind installations levels have significantly declined after the reverse auction mechanism was <a href="https://mercomindia.com/advent-reverse-auctions-wind-player/" target="_blank" rel="noopener noreferrer">introduced</a> 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.

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