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Wind Energy Woes in India as Capacity may drop to just 1000 MW from 3000 MW in 2012 – 70% drop in Wind Energy Installations in India’s Wind Capital of Tamil Nadu

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Wind Energy – India

Wind Power Plants in India are finding the going tough in 2012  as we had written earlier with a number of factors Wind Energyaffecting the growth of the industry in India. Not only have the central subsidy schemes like accelerated depreciation and GBI have been removed, but the wind power players are also facing tactical problems like collecting of dues from the state distribution utilities. Most of the state power distribution companies are saddled with massive debt and payment to suppliers is always a perennial problem. In the case of the wind energy developers, the problem of working capital has become acute with payment delays of more than a year.

Wind Companies are also facing capital escalation of costs with the prices of materials like steel and cement showing a sharp appreciation leading to a 30-40% increase in the cost of wind farms. The rise in costs with a fall in electricity tariffs are squeezing the wind energy developers. Wind energy installations in Tamil Nadu which accounts for almost 40% of the wind capacity in India, has already dropped by a startling 70% in the first quarter of fiscal 2012. With the industrial conditions getting worse it is expected that the trend will continue and wind capacity could drop to just 1000 MW from 3000 MW last year. This would have a devastating effect across the wind equipment supply chain. Gamesa has already dropped its plan of building a wind equipment factory in China.

The Indian Wind Industry in 2012 is finding the going a bit difficult after a record breaking year in 2011. First the accelerated depreciation subsidy which has been around for a long time making India the 5th largest wind energy producer, has been removed. Second the GBI incentive scheme too was removed so that the Wind Energy industry depends on the Renewable Energy Certificates (REC) scheme which is quite fickle and market based. Now the Wind Energy Industry finds itself facing a new set of problems in its bastion of Tamil Nadu which accounts of almost 1/3rd of the total wind energy capacity in the country.

First Tangedco, the distribution utility is threatening to remove the “banking facility” of the wind energy producers which allowed them to sell power at a time when the electricity prices were high. The wind turbine producers like Suzlon, Gamesa and others were also accused by the wind farm owners of colluding to set higher prices. Now the local bodies such  as the collectorates have decided to impose local taxes and fees on wind turbines which are installed.


Wind’s hurdles
Yet, wind comes with its share of concerns. P Krishnakumar, managing director, Orient Green Power Company, one of the largest wind energy companies in the country, with an aggregate capacity of around 400 Mw, says that an increase in finance and raw material cost has made life tough for wind energy players. “The installation cost of a farm that can produce 1 Mw of power has increased to around Rs 6 crore from Rs 4.5-5 crore about four-five years ago. This is mainly due to increase in cement and steel prices, finance cost (which is now around 14-16 per cent as compared to 9-12 per cent earlier).”

For wind to really take off nationwide, Rao says, there needs to be adequate payment security. A lack of incentives has also meant that capacity installed this year is likely to reach only 1,000 Mw, substantially lower than last year’s installed base of 3,000 Mw

The Hindu

Tamil Nadu, which has the largest number of wind mills installed in the country, has seen a drop in installation of new wind turbines during April-June this year. According to the Indian Wind Power Association, just about 80 MW of wind mills were installed during the first quarter of this financial year as against nearly 250 MW last year. This is because of several factors. However, the Tamil Nadu Generation and Distribution Corporation had not paid the wind mill owners for more than a year for the energy supplied to the grid by these mills. He appealed to the Chief Minister to consider monthly disbursement of the amount for wind energy supplied to the grid and to settle the arrears at the earliest. The Energy Consumption Tax that was waived for the last three years had been reintroduced. The waiver must be restored for wind mills. The State Government should take up with the Union Government the reintroduction of the accelerated depreciation scheme for wind mills. The grid infrastructure should be strengthened and more substations established in the State to absorb fully the wind energy generated, he said.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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