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Renew | October 2018

"The wind sector turnaround will start in 2019-20"

In an interview, DV Giri, Secretary General, Wind Turbine Manufacturers Association said that in 2018-19 with the dependence on the SECI bids that have an 18 months project period, and bids from Tamil Nadu, Gujarat and Maharashtra will see the installation of around 2,000-2,500 MW in FY19, further adding that the turnaround will start from 2019-20 and the future is good for the industry

The wind sector, unlike our expectations, has not grown in the last few years due to various challenges. How do you think it will change from the short to medium-term?
The drop in capacity addition is primarily because of the change in procurement method from Feed-in-Tariff (FiT) to competitive bidding. It is true that some of the wind states have stopped procuring wind power, either through FiT or competitive bidding. This is a transition phase and soon it will change. The change is not a constraint in manufacturing or an appetite for the developers (bidders) to the given target of 175 GW.

A lot of auctions were cancelled for the want of developers interest. How has it impacted the manufacturers?
The determination of tariff in FiT and competitive bidding are two different models. Tariff determination for a meaningful Internal Rate of Return (IRR) is based on capex, Plan Load Factor (PLF) and cost of debt. The cancellation of tenders has more to do with connectivity issues.

Do we see any order cancellations as of now? Can we quantify that in numbers and capacities?
The manufacturing of turbines is a continuous process with long lead items and yes, the reduction in orders will impact the OEMs (industry).

How are we poised to achieve the 2022 target of 60,000 MW wind capacity?
The government has set the target and the growing demand for power and mainstreaming of RE, especially wind as the power of now and the future. Procurement must be made, both by the SECI as well as the wind states to fulfill their Renewable Purchase Obligations (RPOs). Liberalising open access for the inter-state transaction and uniform wheeling and banking policy is the need of the hour. The government is already taking steps to promote wind-solar hybrid. Similarly, repowering of old turbines needs to be done, though there are land and other technical issues.

How confident are bankers to fund the wind sector projects, both for developers as well as manufacturers?
Many bankers have expressed that they have a separate portfolio for RE and are willing to support renewable energy and this was expressed in the recently held meeting, chaired by the Minister for Power and New and Renewable Energy, with bankers and a section of manufacturers and developers in Delhi.

There are a lot of 25-year-old low capacity wind turbines which are lying idle or need a replacement. Is there a way to revive these projects?
Yes, there are nearly 3,000 to 4,000 MW of old turbines which are over 15-20 years. They are not lying idle but PLF because of the technology of the first generation could be lower. Repowering is the answer and the issues are on tariff fixation on repowered turbines and the willingness of the present asset owners to repower or give up the land to the other developers.

What is your outlook for 2018-19 and ahead for manufacturing as well as the wind sector in general?
2018-19 with dependence on SECI bids that have an 18 months projects period and bids from Tamil Nadu, Gujarat and Maharashtra will see the installation of around 2,000-2,500 MW this year. We are sure that the turnaround will start from 2019-20 and the future is good for the industry.

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