Wind vs Solar (India)

The solar sector in India has got a strong policy push from the central government leading to an exponential growth and even the target for solar power by 2022 is more than 60% higher than wind power, though wind is a much more mature technology with an established manufacturing and generation ecosystem in the country.

Also read about various solar subsidies in India here.

This has created a lot of angst amongst wind industry stakeholders, as they feel that solar is seeing favouritism by state and central governments both in terms of policy and regulations. While both wind and solar power have “must run” status, state governments are curtailing wind power much more than solar power.

The Indian distribution utilities are mostly in a bad financial shape and delaying payments is an accepted norm. However, some states are delaying payments to wind power developers for more than a year, which is resulting in cash flow distress for these developers. It is also causing anxiety amongst lenders which in general bear 70-80% of the project costs as the share of debt is high in these capital intensive wind projects, costing nearly INR $1 million/ MW to build in India.

Maharashtra has been the chief culprit as it has left more than 500 MW of wind power capacity in the state to be stranded, because it has not signed a PPA with the companies. While wind developers are crying foul, discoms are also complaining that they do not want to pay high feed in tariffs to these wind power plants given that solar power is much cheaper and discovered more transparently in reverse auctions.

In contrast wind industry has much lower competition as large wind turbine manufacturers and developers make good profits, thanks to high fixed feed in tariffs given by state governments. This decreases the incentives of these companies to diminish costs and prices. As a result, while wind power costs have increased in the last 2-3 years, solar power costs have declined by almost 40% in the last one and half years.

While the central ministry is pushing these utilities to make payments to the wind developers on time, the wind industry also needs to decrease prices and costs if it wants to remain competitive to solar energy which has been seeing a sharp decline in prices. Given that wind and solar are mostly substitutable, wind power may see obsolescence unless it reforms fast.

According to data shared by the Wind Independent Power Producers Association (Wippa), Maharashtra owes more than $181 million, Rajasthan $135 million, and Madhya Pradesh $73 million. With these three states accounting for around 11GW of wind capacity (nearly 40% of India’s total), the impact of the delayed payments is being felt across the industry. Rajasthan has been behind schedule in making payments to all power producers because of its financial difficulties. Madhya Pradesh and Maharashtra, although also cash strapped, appear to be delaying payments to wind power producers. The discrimination is most apparent in Maharashtra, where, in addition to the delay in payments, the utility has not signed power purchase agreements for nearly 560MW of new ready-to-commission capacity since early this year, effectively stranding investments worth $600 million.

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Indian Wind Companies foray into Solar

Indian wind turbine generator manufacturing companies such as Suzlon and Gamesa have started making investments in solar power project development and EPC works using their experience in execution of large scale wind power projects in India. However, these companies face stiff competition from other EPC companies such as L&T, Mahindra and others as the entry barriers into solar energy are much lower. These companies to not have the benefit of having inhouse production facilities of WTGs in solar, as most solar panels are imported from China, Malaysia and other places.

Read more about Wind Power in India here.

These companies have followed major wind power developers such as Mytrah, Renew, Green Infra into solar energy as the Indian government has made solar energy as the centre piece of its energy policy. Though the government is saying that it will pivot back to focus more on hdyro and wind energy, the falling prices of solar and its advantages have made solar energy as the key energy growth area.

Gamesa is now venturing into manufacturing high end 1500 volt solar inverters in its wind turbine manufacturing facility in Andhra Pradesh. The competition in the manufacturing of solar inverters is much lower than solar panels and Indian manufacturing locations of Delta, ABB and others are dominant in the Indian market in comparison to solar panels which are mostly imported. Gamesa sees an opening in the manufacture of 1500 V inverters which are still growing as compared to normal solar inverters where the market is saturated. Gamesa which is a global leader in the manufacture of wind turbines is looking strategically to hedge its bets, as solar power becomes a large industry than wind power in India. It is expected that solar power capacity in India would see a future run rate of 10-15 GW addition annually, as compared to 3-4 GW for wind power.

Also read Best Solar Inverters for Residential Rooftops in India.

Gamesa cannot hope to compete in the making of solar panels so it is trying a different tack by making solar inverters. However, it remains to be seen how successful the company can be, as there is huge competition from players like ABB, Hitachi, SMA and others in the utility segment. These companies also have a good technological base which Gamesa does not have (though the merger with Siemens will help remove that disadvantage).

Read Australian Solar Inverters Review

The Indian solar inverter market for the utility segment will be around INR 5000 crore this year and it might increase to INR 10,000-150,000 crore in 5 years. It is a large market and it makes sense for Gamesa to invest, as even a small market share can translate into large volumes. The company also has a captive customer in the form of its own solar EPC division whci his planning to build 150 MW of solar capacity this year.

Suzlon which is the other large wind turbine maker along with Inox has not announced any plans of making any type of solar equipment though it has developed a couple of solar plants and has announced big plans to enter the solar and wind hybrid sector once the Indian policy is finalized. It will be interesting to see how these companies develop their plants for the solar sector going forward.

Solar and Wind mixed use Farms policy in India

While most of the large countries have separate polices for the development of wind and solar resources in the country now, there is no country which has a policy to promote the development of a hybrid solar wind mixed use farms. India has an ambitious target to develop 175 GW of renewable energy by 2022, out of which around 90% will come from solar and wind energy. While the Indian government has implemented numerous initiatives and policies such as solar park, rooftop solar and offshore wind polices, it is for the first time that is trying to build a framework where both solar panels and wind turbines can be installed at the same place.

Read more about Wind Power in India.

There are many synergies to wind and solar generation. While solar panels generate power mostly during the day, wind turbines can generate power at any time (not necessarily day time), depending on the wind speeds. This will help in reducing the need for additional investments into the grid infrastructure to negate the effects of the intermittent nature of wind and solar energy generation. A combined wind and solar farm generation will have a better round the clock availability than pure play wind and solar farms alone.

Here is a list of World’s 8 largest Solar Farms.

The other big advantage of these hybrid farms will be the savings on land costs. In India, land costs are quite high compared to other costs such as labor and equipment. This makes it useful to optimize the usage of land. Solar panels can be installed in the areas between the wind turbines, which are generally going to waste. While there may be some shadowing effect, I think it will be negligible compared to the savings in land costs.

As per the policy, most of the solar and wind sites are located near each other which will make it easy to install 10 GW of combined solar and wind farms across the country. States with high wind power potential such as Rajasthan, Maharashtra and Tamil Nadu are also considered as extremely favorable from the point of view of solar generation due to good solar radiation in these states. The demand is also quite good for electricity, as they are more industrialized than the rest of the country and have high economic growth rates to boost.

The new policy does not specify any incentive that will be given to these hybrid farms. It talks of intervention, mainly in terms of connection to the transmission systems and that these farms will gets subsidized loans from IREDA. The mechanism of how these wind solar farms will be awarded is not specified in much detail.