Installation of fresh wind power capacity in India will cross the 8,000 MW-mark next financial year, says Tulsi Tanti, Chairman, Indian Wind Turbine Manufacturers’ Association.
In a chat with BusinessLine recently, he based this prediction on the fact that problems in building capacity are easing now, and much of the construction backlog will get cleared in 2019-20.
The wind industry has undergone a paradigm shift the last couple of years. Earlier, wind energy companies sold electricity to distribution companies at prices set by the State power regulator.
Things changed for good when the Centre, through its company SECI, began auctioning capacities, signing power purchase contracts with those who offered to sell power at the least price. The era of ‘tariff-based competitive bidding’ began with the first auction in February 2017, when 1,000 MW was awarded. The best price then was ₹3.46/unit, a record low at that time.
Six SECI auctions have taken place since and 8,440 MW have been awarded. Driven by competition, tariffs fell to a record low of ₹2.43/unit before rising to ₹2.83. The seventh SECI auction for 1,200 MW has been announced.
With tariffs falling to such low levels, State governments, too, stopped purchasing power at fixed pricesand began their own auction programmes. States’ programmes and that of power major NTPC have add up to another 2,550 MW, taking the project awards to 11,000 MW.
Poor installation
As at January-end, only 823 MW have been completed. While the target of 11,000 MW appears distant, most projects are still within their deadlines. There have been teething troubles, such as paucity of transmission capacity. Second, since the bidding companies could choose the project location, most (5,485 MW) preferred Gujarat, the second windiest State, while another 2,000 MW chose the windiest, Tamil Nadu.
The bunching of projects led Gujarat to sit up and think, ‘if its best land would be taken up by SECI projects, what of its own projects?’ So, it baulked on land allotment and even brought out an allocation policy, asking companies to shift to ‘wind parks’ – a move that has evoked sharp protests from the industry.
But things are improving. There is better clarity on evacuation infrastructure, as the Central PSU Power Grid Corporation of India is pressing ahead with building substations and transmission lines. As for land, wind companies are buying private land or locating projects elsewhere.
With these, the expectation is that a lot of projects will come up in 2019-20, putting behind 2018-19. Compared with 5,500 MW installed in 2016-17, installations this fiscal till January totalled1,143 MW, with another 500 MW expected to come up in the rest of the year.
Tanti said the industry “suffered for 24 months”, but is coming out of the woods. The brunt of the downturn, Tanti stressed, has been borne more by the 4,000-odd component suppliers and their 2 million employees.
To avoid bunching of projects in a State or two, Tanti had suggested to the government that auctions could be held substation-wise, so that bidders quote a price knowing where their project would come up.
If there has been no action on this for a year, it could be because of the inevitability of wind prices going up as projects would be forced to come up at not-so-windy areas.
Another reason could be the lack of coordination between Ministries; while wind auctions are conducted by the Ministry of New and Renewable Energy, transmission (sub-station) comes under the Power Ministry.