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Renew | August 2018

Financial institutes cast doubts on the viability of projects

<span style="font-weight: bold;">TR Melroy, Chief Operating Officer (Wind and Solar), Mytrah Energy (India)<br /> <br /> Does India have a conducive policy environment to achieve the revised target of 227 GW by 2022, which includes 67 GW from wind energy? </span><br /> The target is achievable if you look at the wind potential and the capabilities of the wind turbine manufacturers, who can manufacture the machines and develop the workforce to execute the project. If you take that as a benchmark, then it is achievable. But the challenge lies in the transmission infrastructure segment û in the connection to the CTU and at the state transmission utility level.&nbsp; The other question is, can we evacuate this massive capacity of renewables and connect to a single national grid? Though the government is aggressive in capacity addition, the same kind of aggressiveness is not seen in developing the infrastructure to evacuate power.&nbsp;&nbsp; <br /> <br /> <span style="font-weight: bold;">Though the set target is achievable, the results are not reflecting on the ground. The capacity addition of the first three months of FY 19 is just about 150 MW. Could you explain? </span><br /> The bidding happened close to the end of the last financial year and it brought down the prices. In parallel, many state projects - such as those in Andhra Pradesh, Karnataka, Rajasthan and Maharashtra - were running with FiT. Uncertainty began mounting when the state utilities started dishonouring the old PPAs and their commitments in terms of giving approvals for the projects. Basically, it is a transition period - from FiT to a competitive bidding regime.<br /> <br /> The manufacturers, Independent Power Producers (IPPs), the financial institutions and all the stakeholders are trying to work in the newly-discovered tariff through bidding. In the current year, we will see around 1,000 MW mostly coming out of the SECI-1 bidding. SECI-2 and SECI-3 will also get commissioned in the following year. The progress is good from 1,000 MW in one tranche to 2,000 MW in single bids.&nbsp; <br /> <br /> <span style="font-weight: bold;">Funding is a concern most of the developers speak about. In the changed scenario of tariffs, how favourable are funding institutes towards wind projects?</span><br /> In the new environment, financial institutes cast doubts on the viability of projects. The prices are lower, but the OEMs are coming out with improved, efficient and higher output machines. This matches with the expectation of the investors. So what we are trying to make the funding agencies and the banks understand is that, with the latest technology and hub heights scaling higher, even with a lower tariff, the projects can be feasible and viable. Presently, there is resistance; but going forward, it would not be an issue. To sum up, there is a changed approach from the financial institutes towards the wind projects. <br /> <br /> <span style="font-weight: bold;">Evacuation is a known hurdle. According to you, how far can this issue be addressed when the green corridor becomes a reality? </span><br /> The implementing body, Power Grid Corporation (PGCIL) is in the process of setting up the green corridor which will connect the eight major wind states in the country. In reality, PGCIL might not have thought about this kind of huge RE evacuation in the country. The network is good with bigger sub-stations. However, this will be helpful for the evacuation of the solar power and not the wind power because of terrain issues. Either PGCIL constructs large lines from the wind project sites to the CTU or the central government should allow state utilities to evacuate power from the wind sites without charging the developer. If that happens, things will move very fast.<br /> <br /> &quot;The wind equipment manufacturing segment in the country currently has a manufacturing capability of 12,000 MW per annum, which can be scaled up to 15,000 MW in the short term.&quot;<br /> <br /> &quot;The wind sector added over 5,000 MW in FY2017, the most substantial capacity addition in a single year seen in India.&quot;<br />
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