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Renew | October 2014

Winds of change

One of the most important segments in renewable energyùwind powerùis all set for a turnaround. Repowering of wind projects could be the next great hope for this space.
Though the opportunity for power generation in the wind sector is infinite, there´s one aspect of this technology that the earlier government had missed out on, the concept of repowering wind projects. The concept is new, and the potential of such projects has so far remained untapped in the country. Though as a concept, repowering in India has been around for two decades, the economic benefits are still in the drawing boards and nobody is willing to experiment with the technology. However, this untapped area in wind energy is likely to create immense opportunities, provided there´s a back-up plan from the government.

So what is repowering? It is the replacement of small capacity machines (less than 500 KW and more than 10 years old) with advanced high capacity wind turbines to increase the installed capacity and electricity output.

Says KR Nair, Vice President, Indian Wind Power Association, ´The repowering of old machines may result in doubling the installed capacity and tripling the energy output of an area.´ He further suggests: ´Hence, the State should provide additional evacuation facilities as the current grid facilities are mostly designed only to support the existing generation capacity and require upgradation.´

The concerned State government should also be prepared to sign a new power purchase agreement (PPA) or revise the existing PPA before its stipulated time. So, as we have argued, the onus is on the government to come out with a policy on repowering and also provide incentives.

A repowering project may roughly cost Rs 7-8 crore per MW. Therefore, if repowering is planned for 2 GW, then the cost incurred may be in the range of Rs 9,660-11,040 crore. As per industry estimates, the repowering trend in India could translate into the sales of over Rs 19,000 crore for repowering companies for a repowering potential of 1.5-2 GW. With an estimated payback period of less than four years, this seems to be a valuable proposition which has fueled a number of wind Independent Power Producers (IPPs) to buy old wind farms at attractive valuations, keeping in mind the land and existing evacuation infrastructure.

Untapped potential
For 18.98 GW of installed capacity through wind turbine generation in India, currently there are approximately 36,000 wind turbines. The capacity of these wind turbines ranges from 225 KW to 2,000 KW each. Out of these, a large area is covered by more than 8,500 small wind turbines (< 500 KW capacity). The number of WTGs installed before 2002 stands at approximately 4,400 (amounting to approximately 1.38 GW of installed capacity) while the number before 1997 stands at approximately 2,663 (amounting to approximately 0.69 GW of installed capacity).

According to Mahesh Palashikar, CEO, GE Renewables (India region), the concept of repowering has potential in the regions which have rich wind resources. States like Karnataka, Tamil Nadu and Maharashtra have more potential as on today for repowering. Palashikar suggests that with the help of advanced technology that we have now, repowering can double the generation of the current power generated. DV Giri, Secretary General, Indian Wind Turbine Manufacturers Association suggests that there are many advantages in repowering concept. ´Maximum utilisation of land source and wind potential to replace old turbines with advance technology where generation can have a multiplier effect of 2 to 2.5 times,´ he said, while adding, ´As a modified platform intercropping of turbines i.e. larger turbines with higher hub heights and larger rotor can be installed without adverse effect to existing turbines.´

Current repowering solutions target old WTGs with a capacity of 500 KW or less. Therefore, the number of WTGs that can be repowered stands at 2,663 if WTGs older than 1997 are targeted, and at 4,400 if WTGs older than 2002 are targeted with Tamil Nadu and Gujarat being the maximum contributors, followed closely by Andhra Pradesh, Maharashtra, Rajasthan and Karnataka. Those WTGs which have a capacity of 500 KW or less but have not completed 10 years since commissioning are not assumed to be available for repowering as yet.

Current status
In India, repowering projects have been initiated at two sites till date - LMW near Coimbatore and Fenner India near Nagercoil. The LMW Coimbatore site had 29 WTGs of 300 kw capacity each and 2 WTGs of 500 kw capacity each pre-repowering, which are planned to be repowered in phases to a final number of 15 WTGs of 850 kw capacity each. In phase I , 8 WTGs of 300 kw capacity each and 2 WTGs of 500 kw capacity each have been replaced with 4 WTGs of 850 kw capacity each. At the Fenner India Nagercoil site, 11 WTGs of 225 kw capacity each have been replaced with 3 WTGs of 850 kwcapacity each.

Wind capacity
In 2013-14, the total installation of wind energy was around 2,100 MW. In 2014-15, the installation is estimated to be around 3,000 MW or so. For the 12th Plan period, a target of 15,000 MW was fixed, i.e., around 3,000 MW per year. The re-introduction of GBI (Generation Based Incentive) and restoration of Accelerated Depreciation (AD) may give some boost to the growth of wind energy in India, but the target of 10,000 MW installation of wind energy per year is now unrealistic and not in sync with the present situation.

Says Kirti Vagadia, Group Head-Finance - Suzlon Group, ´Extending of 10-year tax holiday for power companies by 31st March, 2017, will provide the much-required predictability for investors investing in power projects.´ He adds: ´The clean energy fund will now be doubled annually from Rs 4,000 crore allowing more investments and the restoring of accelerated depreciation will revive the wind sector.´

Of course, this target of 10,000 MW per year could be achieved at a later stage, provided the Government of India comes out with long-term policies and programmes to support the wind energy sector. There are inadequate transmission infrastructures, which is a hindrance for further wind energy development in India. Intermittent and unstable nature of wind energy poses great challenges for grid stability. The early implementation of the Green Energy Corridor may improve the infrastructural requirements for capacity addition of wind energy.

On the demand side, there is no enforcement of the Renewable Purchase Obligation (RPO) by the State Electricity Board /distribution companies. Presently, the RPO is fixed and enforced by the State Electricity Regulatory Commissions (SERC), without any coordination with the State or the Centre. Due to financial ill-health of the State distribution companies, the SERCs are empathetic with them and hence they neither raise the RPO as per the target of the NAPCC nor enforce it.

Meanwhile the question arises, with the government´s agenda to add 10,000 MW of power per year, are India´s turbine manufacturers ready to take the challenge? Interestingly, keeping their differences aside, wind power developers have expressed confidence over Indian wind turbine manufacturers.

The Indian manufacturing set-up for wind energy generators is mature and robust with state-of-the-art technology and has installed capacity of more than 10,000 MW per year. There are 20 manufacturers in India and many of them make high capacity wind energy generators with proven wind technology.

Order book
As the demands increase, the order book position for wind energy projects would also pick up. With the restoration of GBI and AD, the demand for wind energy projects is picking up. Major wind energy developers like Suzlon, Gamesa and GE have their hands full. Currently, Suzlon´s order book stands at $7 billion and it is expected to grow 25 per cent in the coming year. As far as Gamesa is concerned, it added 801 MW of orders in the second quarter of the year, meaning it ended the first half with a 1.91 GW order book - a 24 per cent uplift on the June 2013 situation. With another 393 MW signed in the first weeks of July, the company says it is on track to reach the 2.4 GW guidance for 2014.

Meanwhile, GE Renewables refuses to share actual figures, but the management suggests a significant order increase over its previous calendar year.

Threat from the dragon
As of now, experts suggest that there is no threat from low-cost Chinese wind energy machines being dumped into India. Most of the leading Chinese manufacturers are having financial and quality problems, which prevent them from competing in the international market. Since the Indian manufacturing sector is strong and the quality and cost of the machines made here meet international standards, there is no threat of low-cost Chinese machines being sold in In dia in the near future. Also, India has a stipulation that players must have a manufacturing base in India for getting wind energy machines listed by the government for domestic installations.

As the country is grappling with issues concerning fuel supply ù like the gas and coal shortage, it is now necessary for the government to take constructive steps for the success of the repowering concept. With a potential to double the power output while just replacing age-old turbines with advanced ones, repowering will take away the need for fresh capacity addition of wind facilities and the attendant issues that crop up during new installations.

-Rahul Kamat 

Fact file

  • Currently 2 GW of capacity available for repowering.
  • A repowering project roughly costs. Rs 7-8 crore per MW.
  • Cost incurred for 2 GW of repowering will be Rs 11,000 crore.
  • Expected sales through repowering will be Rs 19,000 crore.
  • 36,000 wind turbines are operational.
  • Number of WTGs that can be repowered stands at 2,663. 

Opportunity and challenges:

  • Certain evacuation augmentation would be required when repowering is done where generation is going to be far higher.
  • Aggregation of land from private (present) owners can be an issue.
  • The dismantled turbine can be exported to SAARC / African countries under various Government Trade Agreements after refurbishing the same. This aspect is ambitious but possible.
  • The land owners who are giving up their turbines and land would have to be properly compensated not only by money but also a stake of good share in the aggregated land oriented large wind power project, where they can become a shareholder.
  • Should the wind farm owners / stakeholders require the avail¡ment of Accelerated Depreciation, then fractional depreciation methodology will have to be worked out in consultation with Central Bureau of Direct Taxes (CBDT).
  • Land being finite and land with rich resource of wind needs to be maximized and repowering would be a right step in the right direction.
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