wind energy

Indian Wind Energy Segment Is Dying Due To Government Apathy

The Indian manufacturers in the wind energy industry have been a forerunner in the development of wind energy sector. Strong engineering developments helped the industry to reduce capital cost and make itself competitive. The most recent turbines can harness energy even at slow wind speeds.

With a proven track record in technological advancements, India became a popular manufacturing destination. The established model for project development was driven by original equipment manufacturers (OEM).

These OEMs bolstered the sector by playing a crucial role in land acquisition, micrositing, data collection and sale of projects.

They also helped with operations and services to small developers on an open-access basis — providing avenues to invest money, signing power purchase agreements (PPAs) at feed-in tariff (FiT) and recovering costs. This helped the sector to self-sustain.

The business model, however, changed with the advent of competitive bidding mechanism and ushered the downfall of wind energy segment in India.

The auctions are now carried out, as part of the bidding mechanism, without a time-table plus there is no assurance of a take off. Moreover, auctions are based on unrealistic tariff caps.

The rush for cheapest tariffs is creating more problems.

Due to intense competition, the independent power producers (IPPs) are likely to bid for large quantities at the lowest possible tariffs and squeeze profit margins of manufacturers.

Persisting problems such as auction cancellations, PPA renegotiations, payment delays are eroding the trust of investors. The combined effect of these challenges and failing projects are forcing manufacturers to lay-off or shut operations.

In 2016, we had 10 GW of wind turbine generation manufacturing capacity in India. Till 2016, we had 21-22 manufacturers. But now, only 6-7 are completely operational as per Indian Wind Energy Association.

The industry is not supported for exports, despite its state-of-the-art wind energy equipment and potential to become significant part of global supply chain.

Currently, the industry exports worth $500 million per annum of wind turbine and components. If it is provided incentives, the same can increase four-fold to $2 billion.

Ironically, the wind sector is struggling to survive. Meanwhile, the government is focusing to develop a solar manufacturing industry.

Reference- Down To Earth, CRISIL Report, Indian Wind Energy Association website