According to research and ratings agency CRISIL, India is likely to witness fresh investments worth Rs 1.1 lakh crore flowing into wind energy projects of 14-16 gigawatt (GW) capacity over five years through 2023.
Capacity additions will primarily be driven by central government (SECI) allocations with relatively stronger counter parties like Solar Energy Corporation of India (SECI) and PTC, reducing risk as compared to direct exposure to state discoms.
The agency also said capacity addition is likely to grow slowly over the next five years, driven by the allotment of central transmission utility’s grid-connected capacities.
The shift to a competitive bidding mechanism has slowed industry growth due to a significant fall in tariffs, triggering a decline in both bid response and profitability for original equipment manufacturers (OEMs).
“A shift to a competitive bidding mechanism in the wind energy sector has caused a slowdown in capacity addition as participants are yet to adjust, with tariffs having fallen to Rs 2.4-2.6 per unit, from Rs 4.0-4.5 per unit under the feed-in-tariff regime. Such low realisations remain unviable for the entire value chain at current capital costs of Rs 6.8-7.2 crore per MW,” CRISIL said.
Reference- Mercom India, CRISIL Report, Economic Times