The growth in the wind sector has been slowing for the past few years in India; this has now been compounded by disruptions due to the Covid-19 pandemic
Renewable power is increasingly cheaper than any new electricity capacity based on fossil fuels, recent trends show. Over half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants, according to a report by the International Renewable Energy Agency (IRENA).
“New renewable power generation projects now increasingly undercut existing coal-fired plants. On an average, new solar photovoltaic and onshore wind power cost less than keeping many existing coal plants in operation,” said a June report by (IRENA). “Auction results show this trend accelerating – reinforcing the case to phase-out coal entirely.”
The renewable energy sector has performed remarkably well despite the crisis precipitated by the Covid-19 pandemic. In India, however, the scenario has been different.
Capacity addition in the renewable energy sector is expected to remain subdued at about 8 GW in financial year 2020-21, given the continued execution challenges amid Covid-19 due to disruption of the supply chain as well as labour availability issues, according to rating agency ICRA.
India’s renewable energy-based capacity is likely to reach 120 to 125 GW by December 2022, with solar capacity constituting 50% of this, followed by 38% from the wind power segment, Sabyasachi Majumdar, senior vice-president and group head, corporate ratings, ICRA, said at a recent webinar.
Although the utility scale solar segment is expected to be close to the 60 GW capacity target set by the federal government, there is likely to be a shortfall in the rooftop solar and wind power segments, Majumdar said.
The growth of wind energy in the country has been below expectations, an official of the Ministry of New and Renewable Energy (MNRE) said, speaking on condition of anonymity. “At the current rate, 60 GW wind power capacity by 2022 appears unlikely. There are many reasons (for this). Solar energy has become cheaper than wind.”
The wind energy sector in India has been impacted by the Covid-19 crisis, the official added. “Disrupted supply chains have strained project development timelines. Impact of delivery of project components and unavailability of workforce may lead to uncertainty in timely project completion and a sequential impact on project economics.”
“The pandemic situation in the country has affected almost all the sectors and the wind sector is not an exception,” said D.V. Giri, secretary general, Indian Wind Turbine Manufacturers Association (IWTMA). “During the initial lockdown period, factories were shut, with no movement of goods and services. Now that certain relaxation has come, factories have opened, and some work has commenced.”
There are other challenges as well, such as a shortage of workers as many have moved back to their village homes, Giri said. The lack of workers in project areas hampers project execution.
Added to this are new changes in the policy that place restrictions on clearance of goods from certain referred countries in turbine assembly. High penetration of wind in the energy mix can therefore be a challenge, Giri said.
Sunil Jain, CEO of Hero Future Energies, believes that the wind energy sector was in a crisis even before the pandemic. “It would be incorrect to state that the Covid crisis has caused problems in India’s wind energy sector. The sector, which was in doldrums even before the global crisis, is now in dire straits,” Jain said. “Most wind manufacturing companies in India are struggling, except those with international parental back-up.”
Jain said the slowdown began with competitive bidding in the wind sector. “Unlike solar, which is cost-effective at INR 2.30 (per KWh), wind at around INR 2.90 to INR 3 is more expensive, and hence, not a lucrative proposition for developers.”
The performance of the wind sector in the past three years at an average of 2,000 MW a year has not been impressive.
Currently, demand creation for wind power is mainly focussed on centralised procurement through reverse auction bids, where the bidder quoting lowest prices get the contract. While this brings about transparency in tariff determination, the numbers are lagging, industry experts said.
Unlike solar that depends mainly on imports, the wind energy sector in India has been largely self-sufficient since almost 80% of the equipment is produced in the country. The rest can also be made in India, said Jain.
The MNRE official also said that wind energy deployment in India has high indigenous component of around 80% to 85%. India already has around 10 GW wind manufacturing capacity and is exporting wind energy systems, products and equipment.
There is however some hope that things might improve, industry insiders said following discussions with power minister R.K. Singh. “Representatives of the wind energy sector have given their suggestions to the minister for betterment of the sector,” Jain said.
Giri said the outlook for 2020-21 is not more than 1.5 GW to 2 GW and this will strain the finances of the manufacturing sector. However, the silver lining is that exports have started picking up.
Since India produces one of the world’s lowest-cost turbines of international standard, an export policy is required to enhance it from the current 2% to 8%, said Giri.
According to him, India has installed 37 GW so far and must install another 23 GW capacity by March 2022. “One is aware that the government is targeting 140 GW of wind by 2030, which means that between now and 2030, that is in 10 years, we must install and commission approximately 10.3 GW (every year).”
While he admits it is a tall target, Giri is confident that it is achievable.
“Indian manufacturing can ramp up quickly with global technology available and simultaneously speed up component manufacturing,” he said. “However, demand creation will lie in the government’s commitment to the Paris accord and multiple procurement models for accelerating growth.”