Wind power sector to add 8 GW in 2 years on favorable policy steps

The wind energy sector is expected to add about 8 GW in the next two years, supported by a slew of recent policy actions.

Indian wind market is set to witness a CAGR of 50 per cent over the next few years aided by several policy actions favouring new wind capacity additions. Annual wind capacity additions are expected to improve to 3.5 GW and 4.5 GW in FY24 and FY25- up from 2.3 GW in FY23, respectively, said a report by ICICI Securities.

The Indian government took a series of steps to reverse earlier policies that hampered wind capacity addition in the recent past.

In a sudden shift away from the feed-in tariff regime for wind projects, the system shifted to an e-reverse bidding mechanism wherein a developer had to bid the cost at which it would supply power from the project. So, the developers bid irrationally in the auction. As a result, the projects didn’t take off. This led to a sharp decline from 5.5GW wind installation achieved in FY17 to 2.2GW in FY18 and further to 1.1GW in FY20. This move also impacted market leaders such as Suzlon, which reported losses between FY18 and FY22 due to wind market slowdown and elevated debt levels.

Now, the Centre has amended the wind energy policy and has now discontinued reverse auctions.

Under the new bids, the wind power purchase agreements will be based on a single-stage two envelope-closed bidding.

It has also planned to auction 10GW wind capacity per annum with a pickup in demand from commercial and industrial entities for round-the-clock power supply.

“The bids for the above capacity have to be done with a State-wise cap of 2 GW per annum. This is expected to reduce the pressure on land acquisition and transmission evacuation. This will ensure that wind capacity addition is well diversified, thus aiding the grid, said the report.

Cost of wind power

Also, the cost of wind power from across the States will be pooled together and passed on to the procuring Discoms. This will encourage wind developers to look at projects in non-wind States too.

The government is also encouraging round-the-clock renewables capacity, which will entail wind plus solar plus storage. About 33 percent of the auctions in FY23 were round-the-clock.

Meanwhile, repowering is also under the government’s active consideration. The government has come out with a draft policy for replacing existing older turbines with new turbines. This is expected to help in increasing the market size for wind turbines.

With a total installed wind capacity of 43 GW, India ranks among the top countries in the world for wind energy development. The country has an ambitious plan to reach 100 GW of wind power by 2030.

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