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Renew | August 2016

Wings in Motion

Positive sentiments abound, the industry is yet to see movement from buyers for completed projects despite decrease in tariffs for wind power.
Though a free energy resource, wind is much intermittent than solar, with speeds varying within minutes and affecting power generation. In cases of high speeds, there can be overloading of generator. Besides this, wind energy is harnessed through turbines - the setting up of which require research, technical know-how and most importantly land. Here, the proposed land too is subject to various factors like wind speeds in the area, proximity to transmission lines or control centres, and environmental considerations.

If sufficient wind resources are found, the developer will secure land leases from property owners, obtain the necessary permits and financing; purchase and install wind turbines. The completed facility is often sold to an independent operator called an independent power producer (IPP) who generates electricity to sell to the local utility, although some utilities own and operate wind farms directly.

Wind mills can be set up ranging scales of: on-shore grid connected wind turbine systems, off-shore wind turbine systems, and small wind and hybrid energy decentralized systems (floating).

Technology
The range of wind speeds that are usable by a particular wind turbine for electricity generation is called productive wind speed, which can range between 4 m/sec to 35 m/sec. The minimum prescribed speed for optimal performance of large scale wind farms is about 6 m/s. Wind power potential is mostly assessed assuming 1 per cent of land availability for wind farms required at 12 ha/MW in sites having wind power density exceeding 200 W/sq.m. at 50 m hub-height.

The energy in the wind turns two or three propeller-like blades around a rotor, connected to the main shaft, which spins a generator to create electricity. Wind turbines are mounted on a tower to capture the most energy. At 100 feet (30 meters) or more above ground, they can take advantage of faster and less turbulent wind. Wind turbines can be used to produce electricity for a single home or building, or they can be connected to an electricity grid for more widespread electricity distribution.

According to Kailash Tarachandani, Chief Executive Officer, Inox Wind Ltd., ´Growth in the Indian wind sector has been aided by tremendous improvement in Wind Turbine Technology with a select few turbine manufacturers offering the latest 2 MW Wind Turbine Generator (WTG) platform.´

The improved platform comes with larger rotor diameter blades and higher hub heights offering superior generation and thus drastically reducing the cost of energy. This considerable improvement in generation is revolutionising the industry and is rationalising the tariff structure in states where the wind tariff was high.

Further speaking on the upgradation of evacuation infrastructure for wind power, Tarachandani says, ´Government of India is focussed on expanding the Green Energy Corridor, which is aimed at facilitating the flow of renewable energy into the national grid, and ultimately intends to increase share of renewable energy in the generating capacity of the nation. Such dedicated transmission capacity will enable evacuation of wind power from states where it is surplus for sale to states with fewer wind resources.´

He also touched upon repowering of wind turbines with poor capacity utilisation. Repowering is the process of replacing older turbines with newer ones that either have a greater nameplate capacity or more efficiency which results in a net increase in the power generated and can lead to increase in wind power capacity and generation. This would involve replacing smaller capacity turbines with the latest technology (2 MW) turbines leading to better resource utilisation. The latest technology turbines would offer much superior Plant Load Factors to the older turbines.

´The major challenge to repowering is upgradation of existing evacuation facilities. Since current grid facilities were designed to support present generation capacities, replacing smaller capacity turbines with higher capacity ones may require augmentation and upgrading the power evacuation facilities,´ he opines and adds that there can be issues around land ownership with multiples owners of wind farm land that may create complications. In order to compensate for the additional cost of repowering, appropriate incentives are also necessary.

Tulsi Tanti, Chairman and Managing Director, Suzlon Energy Ltd adds, ´To execute the envisaged project across India, we need technology in two aspects - one is, now the best sites are exhausted and we need to utilise low wind sites. We need to keep in mind the declining tariff. PPA tariffs are going below `5/kWh. Because of these two challenges it is becoming extremely important for us to invest in technology.´ India´s Unique Proposition The Indian electricity market is very promising and in a demanding situation because the government had set the renewable power target of 175 GW by 2022, out of which 60 GW is from wind. The Indian market is expected to grow by 30 per cent year on year.

States Tanti, ´The country will add 30 per cent of new capacity in 2016 and around 3,400 MW of capacity was added last year. For this year, we are predicting that it will be about 4,500 MW of addition if the plans are fully delivered.´

There is a lot of speculation whether this capacity will come on board or not, but different projects are under construction in different states, leading to about 4.5 GW of capacities during the current financial year.

´With the current wind generating capacity at 26,769 MW, the journey to 60 GW implies a compounded annual growth rate of 15 per cent in the installed wind capacity over the next six years,´ states Tarachandani, adding that to meet its objective of promoting the wind industry, GoI has introduced several regulatory and supporting policies like reintroduction of accelerated depreciation benefits and generation based incentives, inclusion of wind power projects as Corporate Social Responsibility activity and doubling of the National Clean Energy cess.

´The state governments are doing their part as well by providing attractive preferential tariffs for wind power to attract investments in wind energy. Introduction of further measures in the new tariff policy like the Renewable Generator Obligation (RGO) and waiving off inter-state transmission charges for renewable energy are expected to unleash unprecedented growth in the sector,´ he feels.

The RGO mandates all coal-fired plants commissioned after a specific date to generate a certain percentage of their power from renewable energy sources. Inter-state transmission of wind energy at zero transmission charges further boosts the appeal of wind power as an energy source and aids the states in meeting their non-solar RPO obligations.

Besides this, India inherently has the geographic location and wind potential. It is estimated that with the current level of technology, the on-shore potential for wind electricity generation is 65,000 MW. The country is also blessed with 7,517 km of coastline and territorial waters extending up to 12 nautical miles, giving ample opportunities for those looking off-shore. In a step towards identifying and properly exploiting these wind resources, MNRE has estimated state-wise wind power potential in the country.

We also have added incentive as transmission and distribution losses in India have been extremely high over the years, electricity theft is common in most parts of urban India, and due to shortage of electricity, power cuts are common throughout the country - all this adversely affects the economic growth. Hence a cheaper, non-polluting and environment friendly solution like wind, to power rural India is needed.

Aside from the obvious electricity and economic benefits, wind power can also give rise to huge career opportunities in India for both skilled workforce and enterprising entrepreneurs. Case in point: Globally within only three years, jobs provided by the sector doubled from 235,000 in 2005 to 440,000 in 2008, and these highly skilled employees are contributing to the generation of 260 TWh of electricity.

Finance
In recent months the sector has also seen aggressive fall in tariffs for small-sized projects (<500MW) and Tarachandani believes that this is a boon for the sector. ´Tariffs are falling due to improvement in wind turbine technology offering superior generation and thus drastically reducing the cost of energy,´ he states.

This considerable improvement in generation is revolutionising the industry and rationalising tariff structures in states where earlier the wind tariff was high. Lower wind tariffs have not only made wind the cheapest source of renewable energy, but have also made it more competitive on a life cycle cost basis, compared to the traditional sources of energy like coal and gas.

Unlike coal and gas, wind tariffs enjoy the advantage of zero escalation in costs over the term of the power purchase agreement (PPA) making it more affordable for state electricity boards to purchase over a long term. ´Lower wind tariffs will eventually lead to an explosion in volumes purchased from wind and augur very well for the long term growth of the industry,´ he feels.

Besides the fall in tariffs, another problem facing the sector is failure of states to absorb wind energy they produce due to lack of buyers for completed projects. Towards this end, India is set to auction wind farms this year in a bid to achieve the target of 60 GW capacity by 2022.

Varsha Joshi, Joint Secretary, New And Renewable Energy Ministry said, ´the auctions for 1 GW of capacity will start in two months and have a minimum size of 25 MW. The ambition is to spur trading of wind power between states.´

The auctions for PPAs are meant to stimulate investment that hasn´t been flowing fast enough to reach the target. India installed a record 3.46 GW of wind farms last year, bringing capacity to 27 GW. At the same time, around 100 MW of projects are struggling to find buyers, and utilities are reluctant to buy renewable power, which is more costly than what coal plants generate. The new system will seek to spur wind developments by doling out contracts for power purchase.

The government is also making separate changes to rules that will encourage trading of wind power between states, waving transmission charges for renewable-energy projects. That will allow electricity to flow from the most windy states in the south to other areas where demand is acute.

´The government seeks to create a mechanism to discover the right price for interstate sale of wind. SECI will first invite an expressions of interest for a power trader, which will help find buyers for electricity from wind projects and bring out tenders in a couple of months´ time. This power trader will share margins with SECI,´ Joshi said adding that interstate wind sale is also essential for grid balancing. Competitive auctions for wind projects would remove the onus on the handful of the most windy states - Madhya Pradesh, Rajasthan, Gujarat, Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh - developing much of the capacity to use all the power that is being produced. The new system would channel power from there north toward land-locked non-windy states such as Uttar Pradesh and Delhi.

Besides, from point of view of project finance, every state has feed-in tariffs, wherein CERC monitors that system and decides the new tariff based on the costs of inputs.

´It is a well-established system which ensures the quality projects. Otherwise a lot of banks will not be comfortable as a lot of risks are involved and there is no recourse to a banker. There is no security from the promoter or financier, only project´s cash flow is the basis for funding. The way projects are being bid aggressively, the project may not be viable at times. In such cases, the bank is not financing the project. Ultimately, the country needs investment for increasing of capacities,´ opines Tanti.

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