India Wind Industry Challenges

Wind energy capacity has shown a flat year in 2019 in terms of capacity additions at around 2.5 GW as the industry has stagnated due to apathetic policy, lack of growth in the market and issues in getting land and transmission. After a trailblazing year in 2017 when the industry grew sharply to 5 GW thanks to supportive policy and strong demand from southern states, the industry has gone into a funk. The policy has changed from a predetermined tariff for wind power to an auction-based system that has seen prices crash by almost 40%.

The overall power industry also grew by just 1.5% in 2019 which meant that there was not strong growth in the end-use demand which generally increases by 6% a year. Solar power has become a strong competitor to wind energy in the green energy space with almost 6 GW being installed last year. Wind energy is also suffering from a lack of good windy sites and it is restricted to only a few states which have good sites.

The whole wind industry supply chain has also been facing a problem with the lack of growth hurting the suppliers such as the wind turbine companies which have almost 10 GW plus of installed capacity but can’t utilize even 25% of that capacity. Suzlon and Inox Wind which are the largest wind energy companies have seen their stock prices crash as the future also seems hazy. While newer technologies such as solar and wind hybrid plants as well as offshore wind energy have potential, they are still 3-5 years out from maturing and generating enough demand for the industry players.

There is no silver lining to the wind industry in the coming years as well, since solar energy seems the dominant source given its versatility and low prices. Also, the government is not looking to push wind energy as it thinks it has become mature enough to compete on its own leading to a lack of substantial policies or incentives which would give wind energy an edge over other sources.