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Renew | August 2018

We need strong transmission lines for wind

<span style="font-weight: bold;">Kameswara Rao, Leader, Energy Utilities and Mining, PwC<br /> <br /> Does India have a conducive environment to meet its wind targets? </span><br /> The policy from the beginning has articulated that there will be unwind or sunset of all the subsidy elements. And, that has been consistent. Some of them were given sunset in the last budget, while some have continued. State support needs to be looked at in another fashion, namely, transmission and such things. <br /> If you take the supply chain, it has been developed well over the years, in fact, from the late 1980s. Earlier, foreign exchange movement used to hit them very bad as import of components were higher. So, it was recently localised, close to a whopping 80 per cent. <br /> <br /> Momentarily, there were concerns that the supply chain may narrow down. Last year, the pipeline was not visible and some producers have scaled down their operations due to which it was expected that the supply chain would thin out; the smaller players may not survive and the bigger ones may survive a quarter or two. However, we are past that phase and this year, the supply chain is very busy. The order books are fairly robust and the visibility is also clearer now. My conclusion would be that the supply chain is highly localised and now needs to be scaled up to match the market demand. <br /> <br /> There is a growing concern of the resources space. It is not just an issue of site availability. It is a question of the availability of sufficient transmission capacity at the sites. Because of the limitation in transmission, the interest of people are getting congested in a fewer places. If you take the overall wind map, the potential is much larger. But, if one looks at another map with transmission sub-stations, then a narrow shrinking can be observed and that is where the resource constraints are. It is up to us to define the constraints, whether it is of transmission or of resource.&nbsp; I would argue that it is more of a transmission issue than that <br /> of resource. <br /> <br /> <span style="font-weight: bold;">Do you think green corridor will address the problems of RE as a whole?</span><br /> We, from the industry, are not worried about the corridor, but about the sub-transmissions from the generation point to the pooling points. Where are the pooling points today? The bigger issue is to reach the Central Transmission Utility (CTU), where the major 220 sub-stations need sub-transmission facilities that the state utilities need to build. The ball is in the states' court, but they need to be encouraged by the Central Government, Central Electricity Authority (CEA) and if it is a competitive bidding, Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) should put up transmission lines. While it is much easier for solar, it is not so for wind because of the terrain issues.<br /> <br /> <span style="font-weight: bold;">Wind industry is still lobbying for closed bidding and National feed-in tariff (FiT). What is your take on this? </span><br /> It is matter of policy and it is hard to make a judgment. But I think it is perhaps better to step ahead rather than regress back to closed bidding. It is not us alone, but many countries have moved to competitive bidding as well. Let us look at the merits. With such a diverse resource base, it is difficult to set a national tariff.&nbsp; Earlier we used to struggle even at a state level; for example, Maharashtra had many wind zones (five) and then it came down, while in Rajasthan there were two. So even at the state level, a single FiT was not adequately reflective of the resource base. So if it is a single tariff, then people who are in a high wind zone made super profits and those in low wind always complained of non-viability. You cannot certainly have a National FiT. It is too much of an imagination.<br /> <br /> There are challenges in closed bidding also. Even there, you need to make flow of prices, which may be very hard in this context. Which location? How far from the transmission centre? What kinds of transmission capacities are available? Are we able to provide them a clear pipeline? What is required is certainty. Certainty of securing transmission connectivity, certainty of securing order books, securing EPC contracts, etc. <br /> <br /> <span style="font-weight: bold;">Capacity addition in the first quarter of this FY is very low. At this rate, is the target of 37,000 MW by 2022 practically achievable?</span><br /> From the bid perspective, these start happening only from this year (2018), and the supply chain is pretty much pulled up. I would imagine this is more about timing. There were no bids in 2017 for the large part, and it is simply a reflection of the fact that the project takes at least 6–8 months for completion.<br /> <br /> The second reason is, in March, many of the players were busy in the states in meeting their targets and getting their incentives. Typically, a kind of low pace prevails in April and May. It has to pick up – but if you ask how, I really do not know. The ministry has announced tranches of biddings in the coming year. We need to see whether we have the discipline to continue with that. <br />
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