India suffers from lack of good windy sites

One of the biggest problems for the India’s wind energy sector is the paucity of good windy sites for locating the wind farms. Most of the good locations have already been used up and finding a new site is a major problem for wind energy developers. In comparison to the solar energy sector, the wind energy capacity additions have been lagging and 2016 will become the first year, when solar energy capacity additions in India overtake the wind energy capacity additions. The Indian government has framed a number of supportive policies and schemes for the solar energy industry, while the wind energy sector has not got even 10% of the same attention. The recent Indian Budget tried to boost the nuclear energy sector, by making an allocation of INR 3000 crores for building new nuclear power plants; but wind energy has not got the same love.

The ministry of renewable energy is now making some effort to infuse new life into the moribund wind sector, by drafting a new policy for replacing the older wind turbines in wind farms with new modern wind turbines, which have a greater capacity and efficiency. This is expected to boost the wind capacity by 3,000 MW alone. Though this won’t make a major dent into the wind energy target of 60 GW, this shows the intent that the government is looking out for the wind energy industry as well. The government had last year come out with a new offshore wind energy policy, but without any specifics even that policy has failed to result in any outcome. For India to achieve its target of 60 GW of wind energy by 2022, the annual wind energy capacity addition needs to be around 5 GW. However, this does not seem to be occurring and the government has not made any major effort till now to increase the growth rate.

The government will give two benefits for the replacement of wind turbine:

• It will give an interest subsidy of 25 bps over and above the subsidy, which is received by the wind energy sector through IREDA which is India’s renewable energy financing institution.
• The new wind turbines will be allowed to receive the Accelerated Depreciation (AD) and Generation based incentives (GBI)

The outlook for the India’s wind energy sector remain neutral in my view, as the industry seems to be plodding along. The return in the sector are on average around 15-20%, however issues remain around finding good windy sites