In an hard-hitting conversation, Secretary General of Indian Wind Turbine Manufacturers Association, DV Giri suggests some major moves which the current government can take to scale up the capacity of wind power generation which will lead to immense opportunity for turbine manufacturers.
How do you see the Indian market potential for the wind energy sector and subsequently for turbines?
During the 11th Five Year Plan, the country had managed to add 3,200 MW when Generation Based Incentives (GBI) and Accelerated Depreciation (AD) was available. However, when GBI and AD went out of the picture in 2012-13, India witnessed 1,700 MW of wind power addition. But with pressure from private wind power developers, GBI was introduced and the wind energy production climbed up to 2,100 MW in 2013-14.
Moreover, thanks to the reintroduction of AD (yet to get final notification) and presence of GBI, we expect in 2014-15, we will be able to add 1,700 MW (AD) and 2,300 MW (GBI). So all-in-all, we will achieve more than 3,000 MW by the end of FY15.
In fact, with the current government´s positive attitude towards wind energy, it has decided that that in FY16, wind energy sector will have a target of minimum 4,000 MW.
The government aims to add 10,000 MW per year to lift the wind energy sector. How realistic is this particular target and are Indian wind turbine makers capable of meeting the proposed higher targets of the government?
As far as the ability and capacity of wind turbine manufacturers are concerned, at present, we have ready capacity of over 9,500 MW considering 19 small and mid-level manufacturers and large manufacturers. All the wind turbine manufacturers, on a single shift basis, can manufacture 9,000 MW of capacity. So at the current level, ramping up of the manufacturing capacity up to 15,000 MW is not an issue.
How can the States and the Centre change their approach towards the development of wind energy?
States are now finding it difficult to accommodate more wind power and are not coming out with supportive policies. Presently wind is not being treated as a national resource unlike fossil fuels (coal, gas etc.) and (the sector) is almost entirely dependent on States for development and exploitation of wind potential. We lost over 2,200 million units in just four months (June-Sep 2013) in Tamil Nadu due to lack of evacuation infrastructure and low priority to wind power by the State. This is an example of national loss of resource, which cannot be taken back. In s a country with huge power deficit, such wastage should be completely unacceptable. We need a more enlarged role of the Centre in the development of the wind sector in India covering all the aspects. Wind resource should be treated as national resource and all efforts should be directed towards maximisation of utilisation of this unending natural resource and the development of wind sector should not be constrained by absorption capacity of States.
The country should start looking at capacity addition as a percentage of total future capacity addition. We need to have at least 50 per cent of the future total capacity addition under renewable energy. This may lead us to reach 30 per cent of the total installed capacity and 12 per cent of the generation from renewables by 2024. We should target to start with 6 GW per year with a CAGR of 15 per cent. This would require a capacity addition of around 50 GW in next 10 years from wind (assuming wind energy will contribute half of the incremental RE capacity). However, in order to reach these targets, we need to identify the bottlenecks and enablers and take immediate corrective steps with a long term view.
You have raised a valid point of evacuation of power. As on date, assuring the grid availability is a basic concern. How do we sort out this issue?
Absolutely. Evacuation constraints are widespread for wind projects resulting in significant waste of natural resources and loss of revenue to wind generators. Assuring 100 per cent availability of grid to wind power projects should be another prerequisite for competitive bidding. If the government can map the envisaged green corridor properly, the issue of power evacuation from wind resources would be solved. This will also help sale of power from one State to another, smoothly. Another concern I would like to raise is interest rates. In India, high general interest rate environment raises renewable project debt cost significantly. Fixed interest rate debt is rare; the market relies entirely on variable rate debt. There is no low cost funding source for wind projects. Since 2007, benchmark interest rates have fallen significantly in the developed world to stimulate the economy, but have stayed relatively flat in the rapidly developing economies. India is the only country whose benchmark interest rates are higher than they were in 2007. If countries like Brazil can lower their interest rates from 12 per cent to 0.5 per cent, why can´t India?
This significantly high transmission cost is a major impediment in facilitating inter-State sale of wind power. In this regard, support can be provided by putting in place a scheme wherein these charges are waived off for the next five years and thereafter RE generator has to pay overall transmission cost on per unit basis in the same range as that in case of conventional power; the balance should be funded by a Central scheme. This would provide a level playing field to RE generators in availing open access.
Has India been cued in to the growing awareness of use of advanced technology?
In terms of technology, over the years, wind turbine technology has improved and has been developed to suit the low wind regime which is typical in India. The turbine sizes also have been increasing over the last five years with introduction of MW scale turbines. The average turbine size installed in China in 2013 is 1.6 MW, in the USA it is 1.9 MW and in India, it is 1.3 MW. In a continuous effort the develop the turbines to give optimum output at the lower wind speeds, turbine manufacturers have introduced higher hub height turbines with higher swept area. The hub heights of the turbine offered in India has already touched 100 metres. Further, as per the plans of several wind turbine manufacturers in India, year 2014-15 would see introduction of 110-130 metre hub height turbines being introduced in India. In terms of the swept area also the turbines in India are comparable with the turbines offered internationally. Most of the wind turbines internationally have the rotor diameter in the range of 120 -130 metre while in India the largest rotor diameter is 100 metre and with new turbines expected to be introduced in 2014-15 the rotor diameter would further increase.
The analysis of international wind turbine market shows that 79 per cent of the turbines installed internationally are in the range of 1.5-2.5 MW which is the range of turbines available in India.
In the wind sector, what we have seen is no regulatory uniformity across the States. Your comments...
As per the Electricity Act, State commissions shall follow the guidelines of the Central commission while determining the Feed in Tariff (FIT).
However, in practice, it is being followed by only a few States and that too partially. The policies, tariffs, terms and other conditions for wind projects vary hugely from State to State.
Assumed capital cost of wind turbines by regulators across States ranges from Rs 4.50 crore per MW to Rs 6.04 crore per MW. RPO targets vary from a paltry 2 per cent to as high as 11 per cent across States. Wheeling and transmission charges vary from nil to normative (equivalent to conventional). Banking provisions also vary widely and ranging from no banking to yearly banking. Further, the States are also putting yearly caps (viz. 400 MW in Rajasthan) thereby limiting the development.
Meanwhile, all the States have notified some Renewable Purchase Obligation (RPO) targets for distribution licensees and some have made captive and open access consumers also an obligated entity. The RPO targets notified are not in line with the NAPCC targets for most of the States.
Further, the enforcement is completely missing. Most of the State utilities have not been able to meet RPO targets over the last few years. However, most of of the State regulators have not levied any penal provision on the non-complying entities. States like Gujarat has even waived the obligations for distribution licensees. The non-compliance has resulted in a non-functional and illiquid REC market. As on date almost 7.45 million REC (equivalent to a minimum of Rs 1,125 crore) are unsold and 4,850 MW of projects have become unviable on account of the illiquid REC market.
In that case, even the implementation of open access has been limited to only certain States...
Indeed. Open access implementation has been practically limited to a few States and thereby limiting the sale options for wind generators. There is reluctance from the distribution licenses towards providing open access for electricity based on renewable sources and accordingly such open access transactions, both intra-State as well as inter-State, is minimal. In such a situation, majority of electricity based on renewable sources is being supplied to the host distribution licensee. This is acting as a barrier to the growth of the renewable sector as well as burdening the distribution licenses.
The wheeling and banking provisions and higher charges in most of the States are making open access transaction unviable. Further, even in the States where currently open access transactions are feasible (like Karnataka, TN), the provisions lack long term visibility and are perceived as high risk transaction.
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