The Wind Behind The Next Renewables Movement
India is positioned to witness more than 35 gigawatt additional capacity with respect to wind auctions over the next three years. Given the strong long-term volume visibility of the wind sector, the sectoral opportunity is positively inclined towards a healthy growth phase.
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Developing nations are now driving the world’s rapid shift towards renewable energy with India leading the pack to accelerate its goals towards embracing renewables. Renewable energy already accounts for nearly 21 percent of the country’s total installed capacity. While India is ranked 2nd in renewable energy generation trailing China, according to the report published by BNEF - 2018 Climatescope, the installed capacity of RE has more than doubled in the past three years - from 32 GW to 72 GW. Wind energy has been the largest contributor to the RE basket with over 34 GW of installed capacity.
India is positioned to witness more than 35 gigawatt additional capacity with respect to wind auctions over the next three years. Given the strong long-term volume visibility of the wind sector, the sectoral opportunity is positively inclined towards a healthy growth phase. The transition from feed-in-tariff (FiT) to competitive bidding led to wind power becoming one of the cheapest sources of energy. Capacity addition was low, which resulted in some turmoil but tariffs have stabilized now.
The Indian Government has already auctioned around 10 GW through the bidding regime by Oct 2018 and has announced plans to bid out 10 GW wind power capacity each year for 2018-19 and 2019-20. As these projects take-off the ground, installations of the auctioned capacity will rise in 2019 and volumes will significantly grow in the next three years.
A major thrust in the form of GOI’s new initiative entitled “Wind Solar Hybrid Power Policy 2018”, allows the setting up of wind power projects at solar power projects sites and vice versa. It is the right step to boost both wind and solar power generation in the regional corridors and states which have the inherent wind and solar capacities, but lie largely untapped. While both solar and wind energy are efficient and inexhaustible sources of power on their own, when combined into a hybrid system, they have the innate capability to not only saving money but also stem transmission loss through the grid.
Harnessing these two power source types, variable as they may seem, when combined – offer a complementary strength pooling which enables enhanced stability of the grid besides optimising the infrastructure including land and transmission system. The industry recently witnessed the first wind solar hybrid auction for 1200 MW.
National Institute of Wind Energy (NIWE) floated Expression of Interest (EoI) for establishment of 1 GW offshore wind farm off the Gujarat coast, and it received interest from over 30 national and international investors. The government has set a target of 5 GW auctions until 2020 for Offshore. In summary, this seems like a critical inflection point for the renewables energy market.
However, there is a lot more that needs to be done to boost the potential of the wind energy sector in India.
The measures that should be considered include:
- Availability of land and transmission grid for power evacuation at State level is a big concern as the majority of wind energy projects are getting concentrated in Gujarat & Tamil Nadu
- State Government should also invest in advances based on available resources.
- Policy execution is a challenge and better synergy between Centre & State will help in faster roll-out and commissioning of projects handling both power evacuation infrastructure and land allocation for projects
- Sub-station wise auctions - Bidders may quote their tariffs based on wind speeds at the sites that connect to the sub-station. This become more pertinent as the newly discovered tariffs are only viable in wind-rich states of Tamil Nadu and Gujarat
- FiT regime should continue for projects below 25 MW - this will help SMEs to secure energy for a long duration
- Banks and financial institutions need to allocate funds for companies to achieve the overall RE and wind target by 2022
India has the potential to become a global wind energy technology and equipment exporter and a manufacturing hub for renewables in a few years. With the right policy framework, India can be a major wind export economy of more than 5 GW of equipment by 2022, due to its cost competitiveness, mature wind energy value chain and technological-edge.
The road ahead will depend on how smartly and how creatively the energy ecosystem collaborates, and relentlessly innovates to ride the strong sectoral growth story. The time to act is now.
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