Wind energy players’ woes pile up

Twesh Mishra New Delhi | Updated on November 04, 2019

Dilution of renewable energy purchase norms, competitive bids system hit projects

The dilution of renewable energy purchase norms and introduction of competitive bids have hit the wind energy sector hard. The latest casualty due to the unfavourable winds faced by the sector is Inox Wind’s manufacturing facility at Rohika.

In a statement to the stock exchanges, after news reports of a lockout, the company maintained that the shutdown was declared because of fears that certain employees, under the instigation and influence of external forces, could create disturbance in the Blade Plant.

But the company’s letter to the Gujarat government, declaring the lock out, said the overall wind industry in India is going through “a very tough phase”.

The wind energy sector has been worried over lower capacity utilisation of domestic manufacturing facilities and a dearth of projects being bid out for setting up generation capacity. Some industry representatives point out that while capacity addition in the solar sector has grown by over 10 times from 2014 levels, the growth of wind is hardly 1.5 times.

This gloom reflects in the Centre’s own long-term renewable purchase obligation (RPO) trajectory for solar and non-solar sources of renewable energy. The RPO is the minimum percentage of power, of the total energy requirement, to be procured by a power distribution company from a renewable energy sources.

Solar purchase obligation, which was at 2.75 per cent in 2016-2017, is projected to rise to 10.50 per cent in 2021-2022. But wind purchase obligation, is set to rise from 8.75 per cent in 2016-2017 to 10.50 per cent by 2021-2022. The switch to the tariff-based competitive bidding system for wind energy has also stunted the ecosystem for developers and manufacturers. During auctions held in February last year, minimum tariff fell by over ₹4 a unit to ₹2.43 a unit. While tariffs have not fallen further, the subsequent auctions saw a cap below ₹3 a unit being fixed for bids.

“This substantially curtails the margins of manufacturers and is extremely detrimental for the domestic industry. Unlike solar, wind equipments are largely manufactured in India. So it feels that the government would rather let Chinese manufacturers thrive by promoting solar over wind,” another wind sector representative said.

Published on November 04, 2019

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