Wind Energy Sector in India Stalls over Pricing and Land Issues

The wind energy sector in India has faced numerous knocks over the last couple of years leading to deep distress across the entire wind energy supply chain. Major wind energy equipment sellers such as Inox and Suzlon are looking at bankruptcy due to a dearth of orders while their entire vendor base is facing a deeper problem due to their smaller size.

Wind energy developers have been forced to move into a competitive market regime from an earlier fixed price regime where they could earn outsized profits. With tenders showing prices of around INR 2.5-3/KWh, it is very hard for the wind developers to make profits. Even the auctions where the developers win some contracts, the execution time gets extremely delayed due to the perennial Indian infrastructure problem of getting suitable land and its associate clearances. Even large utilities such as Torrent Power have drastically reduced their wind energy ambitions as they can’t find land or transmission to evacuate the power from the wind power plants.

The government has now belatedly started taking cognizance of these concerns by removing the upper ceiling price on wind energy tenders which was a deterrent for bidding by developers. However, this may not be enough as solar energy is starting to eat wind energy’s turf in the last few years. Solar energy due to its modular nature can be installed at a much smaller capacity and also has the advantage of being installed pretty much anywhere where there if free land. Wind energy, on the other hand, can only be installed in places that get good wind speed otherwise it makes it uneconomical. While solar wind hybrid plants have been promoted by the government, they have not really taken off in a big manner due to issues around pricing and project management.