Indian Wind Energy Capacity to Double in 2018 but Viability and Transmission are Big Concerns

The Indian wind energy went through a very painful transition last year with volumes falling drastically to around 1.5 GW when the industry was expecting around 5 GW. The change in the Indian wind subsidy structure where feed-in tariffs were abolished in favor of reverse auctions had a huge impact on the whole supply chain. The tariffs fell drastically to around INR 2.5/kWh from around INR 4.5/kWh as developers as well as wind turbine makers competed fiercely for the limited capacity on offer. The states which used to earlier allow wind energy projects on FIT also shut down their programs entirely as they found the tariffs discovered in the central government auctions to be far lower. The state governments also have changed their subsidy structure and have moved to reverse auctions seeing the success of the central government SECI tenders.

This change in the regime has had a painful effect as many people consider the discovered tariffs to be unviable and these projects may not get funded or built. This is a big danger to some of these projects. The wind turbine manufacturing companies‘ stocks have fallen off a cliff already, as their margins evaporated in this cut-throat environment. While the government has auctioned many wind projects over the last year, the lack of transmission capacity to evacuate power has become a big hurdle. There is a lack of cohesion between the tendering authority SECI and the transmission operators. Power Grid is a huge issue not only for the wind projects but also for the solar projects. While the SECI is merrily tendering solar and wind projects without a care in the world, developers are wondering who will transmit the power once the projects are built.

Also, read list of Micro Wind Turbine Manufacturers

There is no doubt that the reverse auctions have made wind energy once again competitive with solar energy, which was having much lower tariffs than wind energy. Now the wind is competing almost equally with solar energy on price. While the industry margins will be much lower than what they used to be, there is at least a roadmap for sustainability if the irrational tariffs go away in the future. However, the transmission capacity remains a big concern for both solar and wind projects going forward. The 175 GW of renewable energy may not have many chances of success if grid integration is not taken into account.