Gearing up for 80 GW and beyond

With an estimated onshore potential of 300 GW and offshore potential of 70 GW, the country may improve its ranking in the coming years, writes RENJINI LIZA VARGHESE. Wind dominates the renewable energy (RE) segment with an installed capacity of over 34,000 MW. The segment, which was once the leader in RE, may lose its sheen as grid-connected solar energy may take over wind in the coming years. The wind sector- a mature industry both in terms of technology and manufacturing capabilities- is not stepping back, but determined to continue with renewed vigour in capacity addition. Globally, India is in the fifth position in the total renewable power installed category. In wind power, it holds the fourth position after China, the US and Germany. With an estimated onshore potential of 300 GW and offshore potential of 70 GW, the country may improve its ranking in the coming years. The 2022 target for RE has been revised from 175 GW to 227 GW of which the wind energy contribution would be 67 GW. That means, in the next four years, the country would see an addition of 33 GW, which would be a commendable achievement, if accomplished. India would also be setting an example for the world. The question that crosses one's mind is why India-a country which is predominantly dependent on thermal power plants- especially that of coal-based plants suddenly shifted its focus to RE. As a responsible nation, India is also a part of the United Nations Framework Convention on Climate Change (UNFCCC) efforts to fight climate change. UNFCCC is a global body that coordinates with different countries on climate change activities. As a signatory to the UNFCCC, India has ratified the CoP 21 (which is commonly known as the Paris Accord, 2015) in April 2016. The countries that ratified the accord agreed to slash greenhouse gas emissions by shifting away from fossil fuels. In its endeavour to fight climate change and global warming, India has decided to harness renewable sources of energy in a big way. Along with the global nations, India is also taking adequate steps to curtail temperature rise. Harnessing green power in a sizeable way is one of the critical steps in attaining this goal. India announced the National Action Plan on Climate Change (NAPCC) in 2008. As a part of the NAPCC, the government has set specific targets. The policy of Renewable Purchase Obligations (RPOs), which was to be implemented by state governments, was mandated to meet the targets. It is crucial for the government to look at moving away from fossil fuels and tap into the potential of renewables in India beyond 2022. India achieved its current installed capacity of 34,284 MW of wind energy over the last three decades. Meeting the current target of another 37,000 MW in the next four years appears to be a Himalayan task. However, the wind stakeholders are pretty happy about this government announcement, as they feel that the industry has the capability to meet the set target. But the numbers on the ground are not truly reflective of the confidence of the industry. FY2018 witnessed less than 2,000 MW of capacity addition. According to the latest available data, the first quarter of FY2019 stands at 148.48 MW. To achieve the 34,000 GW, the country should be registering a capacity of over 8,000 MW a year till 2022.  Kameswara Rao, Leader, Energy Utilities and Mining at PwC, says, 'I would imagine this is more about timing.' 'There were no bids in 2017 for the large part; it is simply a reflection of the fact that the project takes at least six to eight months for completion. Another reason is, in March, we saw that many players were busy in the states to meet the state targets. Typically, you find a kind of low pace in April and May. It has to pick up. But if you ask how, I really do not know,' he continues. It is true that the sector went through a significant transition in the last year from Feed-in Tariff (FiT) to bidding. The introduction of the bidding process, according to the government, has brought in two significant changes: transparency and reduction in per unit cost of produced electricity. However, some of the industry stakeholders still feel that the government should look at closed bidding and a national FiT that would fuel the capacity addition plan of the government. The government took cognisance of the industry's repeated demand of close bidding request and has commissioned a study to IIM, Lucknow to assess the feasibility in the present scenario. Interestingly, Ashish Mithani, Director and CEO, KP Energy, strongly feels that the government should continue with the bidding process. He says, 'Can there be the same wind speed? Can there be the same Plant Load Factor (PLF) in the same location for different turbines? No. There will be different numbers. FiT is not contributing to the well-being of the citizens of this country. So there should be no FiT and they should not think about it. I think eventually, the industry will mature to the current bidding process.' The barriers The constraints in the wind segment are not much different from those in the other power segments - land acquisition and funding issues are found across all segments of electricity generation, be it thermal, hydro or RE. But wind faces another peculiar challenge - lack of evacuation facilities. This is mainly because of terrains at which the wind turbines are set up.    Through Power Grid Corporation, the government is creating a green corridor connecting the eight wind states in the country. A total of Rs 380 billion investment is being made for the same. Kameswara is quick to add, 'We, from the industry, are not worried about the green corridor, but about the sub-transmission. Where are the pooling points today? Which is a major issue?' To reach the Central Transmission Utility CTU (the major 220 substations), the requirement is the sub-transmission stations that the state utilities need to build. However, the states need to be encouraged by the Central Government and Central Electricity Authority (CEA), and by the Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) to put up transmission lines from the re-source base to the pooling centres for competitive bidding. It is much easier for solar, but difficult for wind because of terrain issues. Funding An addition of 34,000 MW implies that the country would see sizeable amounts of investments. According to a press release by the industry body, Indian Wind Turbine Manufacturers Association (IWTMA), in order to achieve the revised targets, the wind segment would require investments to the tune of Rs 3 trillion by 2022. This estimate is purely for the onshore projects. As the tariff of the wind energy has come down to Rs 2.50 levels, funding agencies, such as financial institutes, cast doubts on the viability of the projects. TR Melroy, Chief Operating Officer (Wind and Solar), Mytrah Energy (India) says that there is no need for such fear. He says, 'The prices are lower, but the OEMs are coming out with improved, efficient, and higher output machines. They match with the expectation of the investors. So what we are trying to make the funding agencies and the banks understand is that the projects are viable with the latest technology, higher hub heights and lower tariffs.'  'Presently,' he adds, 'there is resistance, but going forward, it would not be an issue. To sum up, there is a changed approach from financial institutes towards wind projects.' Road map for 80 GW The government's target of 80,000 MW includes 67,000 MW from onshore, around 1,000 MW towards exports, 1,000 MW from offshore and 2,500 MW from the wind-solar hybrid. The onshore wind sector has a clear pipeline till 2022. The government has already completed bidding for 7,500 MW of wind power. The country will roll out another 11,000 MW soon. This will be followed by 10,000 MW each in FY 2018-19 and FY 2019-20. The wind equipment manufacturing segment in the country currently has a manufacturing capability of 12,000 MW per annum, which can be scaled up to 15,000 MW in the short term. With the current capabilities, the wind stakeholders are optimistic in achieving the set target of 34,000 MW in the next four years.  Exports India aspires to be the exporting hub for the wind energy equipment segment. Currently, the country exports over 500 MW per annum and targets to touch 10,000 MW by 2022. Tulsi Tanti, Chairman, IWTMA highlights the vision of the industry. He says, 'Export has a key thrust area to achieve 8-10 GW by 2022. It is a well-known fact that the growth of in-house R&D in Indian turbine manufacturing with its state-of-art technology is perhaps the lowest in the world, project-wise. This competitive edge can be exploited to a number of emerging markets in the Middle East, Far East and Africa.' He adds, 'The exports can be both turbines as well as components of international standards. Recommendations to boost exports are: (i) Provide six per cent export incentive for wind turbines and components. (ii) zero per cent import duty and five per cent IGST import duty on imports of capital goods and raw material for wind manufacturing.' Offshore opportunities The Ministry of New and Renewable Energy (MNRE) has decided to explore harnessing offshore wind energy in addition to the existing onshore capacity. With an extensive coastline of 7,600 km, the estimated potential of offshore wind is 70,000 MW. Currently, the MNRE is looking at adding 1,000 MW offshore by 2022. It has also announced targets of 5 GW and 30 GW offshore wind capacity addition in the country by 2020 and 2030 respectively. 'India's decision to explore offshore is certainly a welcome move. However, India needs to work towards creating the right ecosystem and infrastructure to attract investments as offshore is very different from onshore,' points out Ramesh Kymal, Chairman and Managing Director, Siemens Gamesa Renewable Energy.  'In fact', feels Kymal, 'turbine is the least problematic part of the value chain. Ports, marine equipment, fabrication units and marine electrical infrastructure are vital. Also, the permitting and approval process for the offshore is very cumbersome, especially considering India's sensitivities with security.' Wind-Solar hybrid This hybrid combination is expected to work well for both the developers and transmission utilities. In May 2018, MNRE issued National Wind-Solar Hybrid Policy for efficient utilisation of transmission infrastructure and land. The government has also issued guidelines and Request For Selection (RFS) for the first 2,500 MW Wind-Solar hybrid as greenfield project. Ashish Mithani, continues by saying, 'For SLDC or NLDC, it is easy to have wind and solar together as the stability of the grid improves phenomenally, if both are going through the same substation.' Meanwhile, from the developer's perspective, the infrastructure cost or investment is optimised. So it is a win-win for both the players. Though 2.5 GW is a small target, it is good as the first initiative. Certain anomalies need to be looked at. There is a separate RPO for wind and for solar. Eventually, they have to remove the intermediaries in the department. Renewables is renewables and should be considered so.' The wind segment also faced some significant challenges from distribution utilities in the recent past. Uncertainty began mounting when the state utilities started dishonouring the old PPAs, including their own commitments in terms of giving approvals for the projects. It is imperative to address such uncertainties that cast a shadow on the growth in the segment. Kameswara signs off by saying, 'From the beginning, the government has articulated that they will unwind or sunset all the subsidy elements. And, that has been consistent. Some of them have been given sunset in the last budget and some are continuedàbut at the policy level, it is clear that all subsidies will be sunset over a period of time.' The wind energy segment, which is going through a transition, is expected to stabilise and grow now. The manufacturers, IPPs, the financial institutions and all stakeholders are trying to work in the newly discovered tariff environment. Recalling here, the wind sector added over 5,000 MW in FY2017, the most substantial capacity addition in a single year seen in India. The industry has enormous potential and the stakeholders have the capabilities. What is now lacking is the will to implement.