The less-than-anticipated demand for wind turbines in the country has resulted in capacity under-utilisation and has badly hitwind energy equipment manufacturers in the country.

According to data compiled by the Indian Wind Turbine Manufacturers Association, the country has the ability to produce equipment for adding 10,000 MW of wind power generation capacity every year. Comparably, 1,700 MW of wind power generation capacity was added in 2017-2018 and just 1,520 MW of capacity was added in 2018-2019.

In all, India’s installed wind power generation capacity has grown from 21,000 MW in 2013-2014 to 34,000 MW in 2017-2018. The country has set a target of 60,000 MW of installed wind power generation capacity by 2022.

The capacity addition has been accompanied by a fall in wind power generation tariffs. According to the Ministry of New and Renewable Energy, the cost of wind power has fallen from ₹4.2 a unit in 2014 to ₹2.43 a unit in 2018.

Lower tariffs mean even lower margins for wind energy equipment manufacturers. “We have been getting a good order book and margins are not there, but at least the tariffs are going up and auctions are coming in a more sustained fashion,” Ramesh Kymal, Chief Executive Officer India at Siemens Gamesa, told BusinessLine .

Recent tenders of wind power generation capacity have seen a bump up in tariffs and the lowest tariff was quoted at ₹2.82 a unit during a February auction by SECI, the central government’s nodal agency for conducting auctions for renewable energy.

SECI has conducted six rounds of auctions for setting up wind power generation capacity. But despite the award of contracts, the orders for procuring equipment have not been finalised by the winners. “People have still not finalised the orders from Original Equipment Manufacturers (OEMs) for projects bid out under the SECI 2, 3, 4, 5 rounds. They have tried out a lot of other competition but now they have come back to us,” Kymal said.

OEM contracts

Explaining the reason for some OEM contracts not being finalised, the IWTMA official said, “There is nothing called a pre-bid tie up during the auctions in India, this allows project developers to scout for OEMs after winning the bid. There is also a land issue in Gujarat that has delayed the pace of project execution.”

Officials at the IWTMA said that the low capacity utilisation of manufacturing facilities is of concern and the domestic industry is evaluating options to increase production from these units. The capacity underutilisation hits companies like ReGen Powertech, Siemens Gamesa, Vestas and Inox Wind among others.