How was the year 2020 for Indian Wind Energy industry? Surely not encouraging. In fact, last shining was seen in 2017 and since then it is appearing continuously dull. Despite of this, everybody is still hopeful about the future of wind energy in India as it is carrying a very high growth potential. Along with the improvement of technology in the wind energy sector, this potential is continuously increasing. Let us have a look in the image below to understand it.
Future looks promising but the present is not. In Feb. this year, I saw an article was wailing that, it was looking like the wind energy sector was losing the vibrancy. Capacity addition was dropping, tepid responses to new wind auctions and wind turbine and blade manufacturing sector was plunging.
That was true at that time and remains true in this end of December as well. Though, initially it was announced that Q3 and Q4 can see a positive change, but now it looks like nothing much is going to happen in 2020-21.
We know the fact that, as coal fired thermal powers are still the base source of power in this country, the Government of India has set a climate mitigation goal to add 175 GW of renewable energy in power grid by December 2022. Out of this 60GW will be from wind energy. Rest 100 GW from solar, 10 GW from bio-mass and 5 GW from small hydro units.
After adding 5.5 GW in 2016-2017 everyone was ecstatic to hit 60 GW in time (by 2022), but unfortunately policy missteps led to a downturn in the growth of wind energy, including all other renewables. In 2017-18 & 2018-2019 the targets were 4 GW each but actually added about 1.88 GW (47%) and 1.48 GW (37%) in respective financial years. Observing the distressed situation target in 2019-2020 had been reduced to 3 GW, but again actually achieved only 2.07 GW.
In 2020-2021 the target is set to 3000 MW (3 GW) and till Nov’20, achieved only 689.8 MW (0.69 GW), making country’s total capacity to 38433.55 MW. Expectedly, capacity addition can rise up to 1.5 GW (maximum) till the end of the financial year in 31st March 2021. Even then also the drop in capacity addition will be around 27.5% this year as compared to 2019-2020.
Now that 2020-2021 target is also about to slip therefore, around 50% of the target will get shifted to the next financial years and industry is sincerely expecting that the projects to be commissioned in 2021-2022 will be on track, because most of them have power supply agreements.
Coming back to 60 GW target by 2022, in this situation as being cited by the market research agencies, in a best-case scenario India possibly be successful to install something around 14 GW within the period of next two years and arrive to 54 GW by 2022. Otherwise, in a worst-case the attainment could be 48 GW.
India has touched 90.39 GW up to November 2020 including all renewable sources, viz. wind, solar, biomass, waste to power, small hydro etc. Apart from this,
- 30 GW including 10GW wind energy and 18GW solar is under implementation.
- 40GW including 3.4GW Wind and 36GW solar is under tendering process.
As per Ministry of New and Renewable Energy (MNRE) 100 GW mark of renewables will be attended by 2020.We will come to know the exact figure around January 2021 only. At this moment it appears that focus is more on solar capacity increment than wind energy. I guess it is an attempt to cover up ‘wind’ loses with quick ‘solar’ in order to hit 100 GW announcement.
So, what will be the fate of wind in near future? what are the principle causes of this (temporary) lag?
In a recent webinar, CEO of Hero Future Energies, a prominent renewable developer opined that the crisis actually initiated during 2017, much before the Covid-19 crisis, now arrived in a dire strait, making almost all wind turbine & blade manufacturing companies and renewable developers in India struggling. Only those who are having international parental back-ups are in a little comfortable state.
He further opined that the retardation began with the start of competitive bidding in the wind energy sector, “…wind at around INR 2.90 to INR 3 is more expensive, and hence, not a lucrative proposition for developers.” In my view, he was right.
At present these are the issues that are hampering wind energy growth in the country:
- Delay in payments/non payments by DISCOM to the developers,
- Ambiguity in GST,
- Inadequate grid capacity and delay in upgradation initiatives,
- Unclear site development guideline and strategy,
- Price pressure and resultant unviability of project and as a consequence
- Lack of interest of financial institutions in wind.
Over last couple of years policy inadequacies have actually ruined the growth and the confidence of the industry have shattered tremendously. Year on year capacity addition had reduced making the target of 60 GW by 2022 impossible. Moreover, already slowing growth of wind energy sector in India was further compounded due to the pandemic (Covid-19) this year.
That’s why possibly MNRE is stressing on solar and other sources of renewables more to cover up the short fall in wind, in order to achieve the target of total 175 GW renewable energy by 2022.
Government is launching auctions more and more for solar energy projects and in 2020 so far very few bids for wind energy has happened and the responses were also lukewarm. In January a 1.2 GW wind solar hybrid tender was floated and the bid submission date was extended up to 6 July. Then, in March a 2 GW wind tender was floated and the bid submission date was pushed back from 6 May to 9 June. Only couple of bidders had shown interest namely, Adani Green Energy, Enel, CLP India and SB Energy and that too the capacity weren’t fully sold.
However, there is definitely some indications that the situation might improve from 2021.As I got to know that the representatives from wind energy sector have placed their suggestions in front of the government and the government is working on it.
Meanwhile, all projects under construction will be granted an extension of commissioning deadlines. At this point of time, total active pipe line under implementation is around 8.6 GW. Out of which 3 GW is supposed to get over in 2020-2021 and 5.2 GW in 2021-2022, rest 0.4 GW in 2022-2023.
It has been witnessed that during lock down (Covid19 pandemic) when many state-owned power distribution companies (DISCOM) invoked ‘force majeure’ to suspend procurement of renewable energy and deferred payment, increasing the risk of non-payment of dues. To correct the situation the government got active and announced an economic relief package focusing on DISCOMs. A three months moratorium on payments by DISCOMs and waiver of penalty for the late payments. At the same time issued a guide line to grant renewable energies a ‘must-run’ status and instructed power producers to raise e-invoices to DISCOMs for timely payment.
One more initiative by the central government is to allow Commercial and Industrial houses (C&I) to set up their own wind energy power plants. C& I usually have high demand and is accounted for a small but consistent market share. The government estimates that during the period between 2020 to 2022, C&I will occupy 5-10% of market share, thus will generate a small but steady consumption demand. Therefore, allowing them to set up wind power plant could be proved as a good step for the growth of wind energy sector.
The General Secretary of Indian Wind Turbine Manufacturers Association (ITWMA) is looking a little further long and said in an interview that to achieve the target (taken by the government) to reach 140 GW of wind energy by 2030, next year onwards an average of 10.3 GW per year must be installed for next 10 years.
It is well achievable, sector has that capacity available, provided government acts effectively towards it and smoothen the existing hurdles. A quick alignment between the State Government’s policies of permits and project approvals and the Central Government’s renewable policy is the need of the hour for seamless executions.
Leaders in wind turbine manufacturing space and projects developers are keeping their optimisms alive and continuously readjusting their business models to survive in this lean period. Unfortunately, some are shutting down some of their units and some are downsizing their team strength. At least one renowned player is not able to pay the employees regularly.
So far, the biggest model maximum being used in Indian market is 2 MW and its decimal add on variations. In order to provide more cost effective wind energy solution that will harness the countries unique wind availability pattern, particularly its low to ultra-low wind sites, manufacturer are focusing for more bigger turbines.
- Nordex Energy has landed with its 3MW model (AW140/3000),
- Suzlon Energy has commissioned its 2.8MW prototype (S128 2.6MW/2.8MW),
- GE has launched its 2.7MW model (GE2.7/132),
- Siemens Gamesa is planning to launch 3.4 MW model in 2021,
- Envision Energy will be launching 3MW in near future,
- Vestas is working to introduce V155-3.3 MW model, and
- Inox Wind is developing 145-3 MW model for 2021.
Top peoples in the wind energy industry, Mr. Tulsi Tanti of Suzlon, Mr. Ramesh Kaymal of Adani Green, Mr.Thomas Scarinci of Vestas have shown their enthusiasm in recent webinars and interviews. All are hopeful that the Government of India will aggressively facilitate the wind energy capacity addition – as a part of total renewable energy target – by the way of recreating and reinforcing a conducive business atmosphere, where the expected growth of the sector can be attained within the planned time frame.