Facing headwinds

The wind power sector is going through a transformation with the entry of competitive bidding process. Though it could keep up the pace as of now, analysts say, it will slow down going ahead. India has been quite aggressive with renewable energy targets. It had a renewable energy capacity addition target of 14,550 MW, grid renewable power (wind 4,000 MW, solar 10,000 MW, small hydro power 200 MW, bio-power 340 MW and waste to power 10 MW), for 2017-18. Besides this, it has also set targets of 15 MW equivalent waste to energy, 60-MW eq. biomass non-bagasse cogeneration, 7.50-MW eq. biomass gasifiers, 0.5-MW eq. small wind/hybrid systems, 100-MW eq. solar photovoltaic systems, 150/25-Nos. eq. micro hydel and 110,000-nos. family size biogas plants have been set for 2017-18. Targets are considered as the prime driver in any segment. But, the wind segment seems to be under the weather, wind power stakeholders are of the view. Declining tariffs, low capacity addition in the current financial year are painting a not-so-good picture of the sector. According to data, wind tariff in the last one year slumped over 30 per cent - probably one of the steep declines the sector witnessed. In February 2017 when Solar Energy Corporation of India (SECI) auctioned 1,050 MW, the tariff stood at Rs.3.46 and it has touched a low of Rs.2.43 when Gujarat auctioned 407 MW in December 2017. The sharpest decline was between August and October 2017. The tariff came down to Rs.3.42 during the auction of 450 MW in August 2017, which experts say, was still manageable. It took a plunge when SECI auctioned the next set of 1,050 MW in October 2017 by touching Rs.2.64. On the other hand, capacity addition backed by good numbers in the beginning of the year, took a hit in the past few months. Wind power installation in the month of December 2017 is 101.60 MW. The total installation in the first nine months of 2017-2018 is 568.76 MW. The total installed capacity of wind as on 31 December 2017 is 32937.74 MW. However, the government keeps a positive outlook for the renewable energy segment. According to a press release by Ministry of New and Renewable Energy (MNRE), globally, India has achieved to grab the fourth position in wind segment standing at the sixth spot in solar power-installed capacities. The country is confident of achieving the set target of 175-GW renewable energy by 2022.    RK Singh, Minister of State (independent charge) said the current financial year may be a capacity addition of  9,500 MW. During the previous parliamentary session, the minister in a written reply to Lok Sabha had said SEI had finalised the two tranche of wind bids in the year which amounts to over 2,000 MW of Inter-State Transmission System (ISTS)-connected wind power projects. It further says that bids for an additional capacity of 2,000-MW\, ISTS-connected wind power projects are scheduled for submission in January 2018. In addition to SEI bids, states like Tamil Nadu, Gujarat and Maharashtra, also  have issued bids of 500 MW each. Above all this, the Ministry has proposed bids for another 4,000 MW in the current financial year. As per the reply in LS, after  the above said bids, cumulatively 9,500 MW capacity of wind power projects would be bid out by the end of the current financial year. Tulsi Tanti, Chairman and Managing Director, Suzlon Energy in one of the statements said, '2017 was a watershed year for the renewable energy industry in India with significant policy reforms such as competitive bidding in wind, record low wind and solar tariffs and GST roll-out. In addition to this, technological advancement and increased competition are steering new possibilities for clean energy.' However, Tanti further clarified, 'In India, investors are bullish and excited to be part of the renewable growth story. While the wind industry's transition to the bidding regime created short-term challenges in 2017, it has laid the foundation for sustainable and inclusive sector growth. Wind industry is poised to grow to about 8 to 10 GW annually, with 5- to 6-GW annual bidding from the central government level, 3- to 4-GW capacity auctions from the nine windy states and 1- GW capacity expected from the public sector undertaking (PSU) and captive markets. This will pave the way for unlocking 300-GW wind energy potential in India and harness the latent potential of non-windy states.' However, the reality seems different on the ground. The drop in capacity addition is a point of concern for the industry. The industry estimates put capacity addition in  2017-18 between 1,200 MW and 1,500 MW. This estimation is based on the total capacity addition in the current financial year with installations up to December 2017 totalling to 568.70 MW. For the next year (2018-19), it will need a minimum of 3,000 MW and possibly up to 4,000 MW. There are green shoots in these challenging times. India crossed 60-GW of installed renewable energy capacity in the quarter ended 30 September 2017, which is a considerable achievement. The share of renewable in India's energy basket has increased to 18.37 per cent.   Challenges The country saw the largest-ever wind power capacity addition of 5,502.39 MW in financial year 2016-17. It exceeded the target by a whooping 38 per cent. 'The sector is battling with the following issues - a) Aggressive bidding with small bids (SECI 1 & 2 and state bids) have put pressure on the manufacturers and developers resulting in low tariff. b) ISTS waiver given up to 2019 needs to be extended up to 2022. c) Non-signing of PPAs by discoms and restrictions on open access allowable under Electricity Act,' DV Giri, Secretary General, Indian Wind Turbine Manufacturers Association (IWTMA), pointed out. Key drivers The universal law says every decline sees a rebound. However, the time for the recovery may vary according to the availability of favourable factors. Wind segment can breathe easy as the international oil prices have started their upward journey. Factors like India's major dependency on oil and government's efforts to tap alternative sources like wind and solar to fill in the gap, will drive the wind segment, going ahead. Wind also has an advantage of not using water in any form during electricity production. As predicted globally, water is going to be the next scarce resource that will put countries into challenging situations.' There are steps that need to be implemented which can bring back the lost momentum to the sector. Giri added, ' The market visibility for the manufacturers and developers which is lacking currrently, is sensitising Indian bankers who are currently shy of investment. There is a definite need to help the micro and small medium enterprises (MSME) sector which can bring a minimum of 1,000 MW as the current climate does not give them any opportunity. And, export which has a large potential with identified issues, can help as a foreign-exchange earner and 'Make in India'.' That is not all, re-powering the old turbines with technologically-advanced new turbines could create some kind of a movement in the slow wind market. While hybrid is another segment the wind power players are actively looking at, the industry is looking forward to an investor-friendly wind-solar hybrid policy.  That is considered as a win-win situation for the developer both green field and brown field, and will help transmission as loading rises and scientific methods of forecasting and scheduling these two RE sources take centre stage as a future energy mix. Land is becoming an issue in India and people are looking at minimising land usage by putting up more efficient turbines. The country has witnessed technological improvement in the past few years. In terms of turbines, there is high capacity turbines available. The technology has improved to the level it helps the developers to harness wind power even in the low-wind terrains. Even in scheduling and forecasting, we have seen the land scape changing with near to accurate predictions. Way Forward Signs off Tanti,'Technology and innovation will remain the catalyst that will drive renewable energy growth. Digitalisation of services, innovation in tower and blade technologies aimed towards making unviable wind sites viable, ensuring better yield and increasing turbine utilisation will be the key focus areas. The industry will collaborate further to improve the supply chain, enable grid integration and leverage digital technologies.' Wind is going through a transition period of feed in tariff (FIT) to competitive bidding. Close bidding can be seen as an option as done in other sectors.  Grid connectivity, access to buyers, stabilisation of tariff and clearly-set goals of the government for 2022 and beyond will aid sustainable, all-inclusive growth. - Renjini Liza Varghese