logo

State of India’s wind energy sector

State of India’s wind energy sector
Wind energy is the only source of energy that requires no water to generate power. All other sources require water during operation or maintenance. This is an added advantage for a country like India, which is plagued by water shortage.

The wind energy potential of India has recently been upgraded to 302 GW by the National Institute of Wind Energy (NIWE). However, the total installed capacity of the country stands at only 24 GW. This means there is huge scope for expansion of the wind energy sector.

Potential
NIWE estimates the potential of wind energy according to three different hub heights—50 m, 80 m, and 100 m. According to their recent assessment for 100 m hub height, Gujarat, Karnataka, and Maharashtra have the highest potential. The quality of the recent assessment (100 m) is higher than that of the previous assessment (50 m).

Even though Gujarat has the highest potential in India (84 GW), the installed capacity of the state remains low (3.8 GW). Tamil Nadu, on the other hand, has the highest installed capacity (7.5 GW). This is nearly one-third of the country’s capacity. Among southern states, Kerala has the least installed capacity (35 MW).

Growth
India tryst with wind energy began in the early nineties. Since then, India has witnessed steady growth. China, however, began its journey after India in 1995. It  overtook India in 2008 when its capacity doubled every year in 2006, 2007 and 2008. Currently, China’s capacity is five times bigger than India’s.

Global forecasts show China will reach 347 GW of installed capacity by 2025. India is also expected to have aggressive growth in the sector and will drive the majority of the growth in wind energy in the Asia-Pacific, excluding China (APeC). India is expected to commission 9.2 GW between 2015 and 2017. The reason behind India’s expected growth is the reintroduction of government schemes, generation-based incentive and accelerated depreciation.

Tariff
Wind power tariffs vary across states and depend on several factors like wind power density (WPD), commissioning period and the benefit of accelerated depreciation. The Central Electricity Regulatory Commission (CERC) classifies wind tariff based on WPD of the project. The dominant trend is that if an area has high WPD, then the tariff is low because it can generate more power than low-WPD sites. A similar classification has also been adopted by Maharashtra Electricity Regulatory Commission (MERC).

States like Tamil Nadu, Rajasthan, and Andhra Pradesh have fixed tariffs during the commissioning period of the project. A few state commissions have set a leveled tariff for the next 25 years without any escalation. Madhya Pradesh and Gujarat fall into this category.

Incentives
Wind power incentives are disbursed at both the state and Central levels. Different state governments make the purchase of renewable energy obligatory by issuing Renewable Purchase Obligations (RPO) to DISCOMs. The DISCOMs can fulfill these obligations by generating their renewable energy or resort to renewable energy generators to purchase a renewable energy certificate (REC). When a renewable energy generator generates 1 MWh of energy and sells it to the grid at the conventional power tariff, the generator receives an REC. It can then be sold to entities that need to meet their renewable purchase obligations (RPO).

Karnataka’s RPO is the highest, making the purchase of 10 percent of generated power from renewable sources obligatory. Karnataka has made it obligatory for only two of its electricity supply companies (BESCOM and MESCOM). Haryana, Chhattisgarh, and Meghalaya have low obligations with 2.75 percent, 2.5 percent, and 1.09 percent respectively.

Central incentives are provided by two ministries—Ministry of New and Renewable Energy (MNRE) and Ministry of Finance (MoF). The MNRE provides a generation-based incentive (GBI) to wind power producers at Rs 0.5 per unit of electricity fed into the grid for not less than four years and a maximum period of 10 years with a cap of Rs 1 crore per MW. With GBI, investors will receive Rs 0.5 per unit of electricity generated over ten years, in addition to tariff determined by state regulatory commissions.

The MoF provides accelerated depreciation (AD) at 80 per cent of the value of wind power equipment during the first year of project operation. Under AD, an asset loses its value at a rate faster than normal. This method provides greater deductions in the earlier years of the project and minimizes the taxable income. Companies can avail of either AD or GBI, but not both.

Challenges and advantages
Potential challenges include grid integration, resource characterization and operation and maintenance of transmission infrastructure. Offshore technology is far more expensive than onshore wind, which raises the cost of generation.

However, offshore technology also has distinct advantages such as higher wind speed and large wind resource. The capacity utilization factor (CUF) for high-range offshore wind farms is higher than that of onshore technology. Hence, offshore wind power allows longer hours of operation. Additionally, it has the potential to meet the power demand of load centers on or near the coast such as Chennai and Vadodara.

According to the offshore policy report, preliminary assessment suggests that projects off the coastlines of Rameshwaram and Kanyakumari in Tamil Nadu have a potential of 1 GW each. The Global Wind Energy Council (GWEC) is already developing a roadmap for offshore wind in India, with a particular focus on Tamil Nadu and Gujarat. Suzlon’s assessment shows more than 1 GW of offshore wind energy potential along Gujarat’s 1600-km coastline.

(Sridhar is a senior research associate for renewable energy at Centre for Science and Environment, Delhi. Views expressed are personal. Additional inputs from Down to Earth)
Sridhar Sekar

Sridhar Sekar

Our Contributor help bring you the latest article around you


Exclusive

View All

Latest News

View All
Share it
Top