India may have set for itself a very aggressive and ambitious target to boost renewable energy generation in the country but the industry feels the development and increased focus on solar energy could very well take the wind out of the sails of wind power companies in India.
The government plans to take India’s renewable energy capacity to 175 GW by 2022 which comprises 100 GW solar, 60 GW wind, 10 GW from biomass and 5 GW from small hydro powers.
With around 27 GW cumulative wind installations in India, the sector is almost half done with the target. But the developers are now feeling the heat to achieve the other half of the target with uncertainty on extension of generation based incentive (GBI), coupled with unwillingness of state power distribution companies to support costly power.
Currently, wind power generation is a step behind as developments in solar override developments in wind, feels Sunil Jain, Chief Executive Officer and Executive Director, Hero Future Energies.
“Among other reasons, the delay in signing power purchase agreement and the new draft policy of re-powering the turbines below 1MW capacity, is keeping wind power developers in a dilemma. Close to 550 MW of wind generation capacity is lying idle in Maharashtra as the state has refused to sign power purchase agreement with the producers. Furthermore, the reduction of levelized tariff from 5.92 kwH to 4.78 kwH in the state of Madhya Pradesh for all the wind power projects commissioned this financial year, have made these projects unviable,” Jain said.
Additionally wind power technology is fairly matured vis-a-vis solar power, reducing the possibility of significant reduction in cost of generation and/or technological obsolescence.
Adding to the industry woes, the new draft wind re-powering policy expects wind turbines below 1 MW of capacity to be replaced. However, the incentives offered on it are insufficient and the overall cost of re-powering is likely to be greater than the cost of setting up a green-field facility, including the cost of power substations.
Around 3,300 MW wind power capacity was added in 2015-16 as compared to the previous highest installation of 3,196 MW in 2011, propelled by technology and conducive policy environment for renewable.
The growth was way higher than the industry estimates of 30 to 40%. The industry has attracted an investment of over $3.16 billion and the cumulative installations of the sector is about 64% of India’s total grid interactive renewable energy capacity. This is equivalent to reducing carbon emissions by over 58.56 million tonnes per annum or planting over 1.76 billion trees,” Suzlon Chairman Tulsi Tanti said.
However, Tulsi noted that to maintain the growth momentum, the government should consider few policy recommendations such as continuation of Accelerated Depreciation and Generation Based Incentive till 2022, earmarking at least 20% finance for renewable energy by banks, supporting SMEs by 5% interest rebate for using renewable energy for captive requirement and improving availability of grid and land infrastructure at state level.
On the other hand, solar has continued to receive privileged attention from both the government and investors as there is huge growth potential in the sector compared to wind which has become stagnant over the years.
Among the various schemes and incentives to promote the use of renewables in India, the government recently affirmed sanctioning of 30% capital subsidy for rooftop solar installations to residential, government, social and institutional segments. Commercial and industrial entities are excluded from this scheme, ensuring that the funds are made available to those who are genuine need of funds.
“The doubling of coal cess in the Union Budget 2016-17 is likely to amass Rs 18,000-20,000 crore annually. Out of these, approximately Rs 5,000-8,000 crore will be diverted to renewable sector, primarily solar, to fund the solar rooftop subsidies, depriving wind energy altogether,” said Sunil Jain.
As a result, many renewable energy companies, which were primarily present in the wind sector, are now slowly trying their luck in solar as well.
The largest wind energy company Suzlon has recently forayed into solar along with others including CLP India, Mytrah Energy (India) and ReNew Power Ventures. Even investors as big as Japan’s SoftBank have expressed interest towards India’s solar power sector. Jordan Reed Womens Jersey
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