• India has the fourth-highest installed wind energy capacity in the world.
• However, with adjustments to the policies and bidding mechanism, the potential is greater and can be accelerated.
• Transparent and closed bids, bundling of tarrif are some ways in which wind energy sector can go up again.

India’s Current Capacity of Wind Energy

• India’s total installed capacity was 41.67 GW as on September 30, 2022.
• 60.15 billion units were generated in 2020-21.
• The Indian government set a target for 175 gigawatts (GW) of renewable energy capacity by 2022.
• The goal included achieving 60 GW of onshore and 5 GW of offshore capacity for wind energy.
• India has potential for more than 602 GW of onshore wind energy at 120-metre hub height and 100 GW of fixed and floating offshore, as per the National Institute of Wind Energy (NIWE) and the World Bank Group.

Challenges for India’s Wind Energy Sector

Adverse procurement model

• The procurement model was changed from state procurement based on feed-in tariff (FiT) to central procurement through an e-reverse auction in 2017.
• A feed-in tariff is an energy policy focused on supporting the development and dissemination of renewable power generation.
• A reverse auction is a type of auction in which the traditional roles of buyer and seller are reversed.  
• Thus, there is one buyer and many potential sellers.
• Currently, there is only one procurement model through Solar Energy Corporation of India (SECI), where the bid size is 50 megawatts.
• Since the bid size is 25 MW for state bids and 50 MW for SECI bids under the reverse auction, it eliminated small and retail investors from participating in procurement.
• The government is now considering closed bidding with eligibility criteria for bidders and allotment of bids on bucket filling method.
• The majority of wind suppliers are facing financial challenges and the market is slowing down at 1.5 GW per annum year-on-year due to delayed project commissioning.

Challenges in meeting targets

• India may fail to achieve 2022 goals despite having 37.5 GW of onshore wind power installed in end of 2019 due to cost, mitigating payment risk, transmission capacity, and land use.
• Even in a best-case scenario, wherein these bottlenecks are resolved, the cumulative installed base of onshore wind would reach only 54.2 GW by 2022.

Geographical Concertation of wind-powered projects

• Current bidding is based on tariffs derived from site plant load factor (PLF).
• PLF is the ratio of average power generated by the plant to the maximum power that could have been generated in a given time.
• Gujarat and Tamil Nadu are the highest PLF states and to realise better tariffs, most projects are being planned in these states only (60 per cent in Gujarat and 30 per cent in TN).
• Competitive bidding at low tariffs has led to the concentration of wind projects in Gujarat and Tamil Nadu.
• This has put pressure on land availability and power evacuation infrastructure in these states, leading to delays in project commissions.
• The Bhuj II, Jam Khambhaliya and Tirunelveli extension projects were due in 2021.
• The issue of land availability in Gujarat may have been covered, but experts believe the greater issue of grid planning persists.
• example, projects awarded by SECI in 2020 are yet to take off due to delays in the commissioning of substations at Koppal and Gadag in Karnataka.
• Apart from the concentration of projects that create severe pressure on land, the creation of infrastructure for power evacuation leads to a choking situation, as seen in Gujarat.
• This is creating execution challenges at the state level.

What could be done?

• To accelerate growth in the wind energy sector, FiT is required in various states, based on their resources and PLF.
• Currently, the PLF in India varies in the range of 35 per cent to 43 per cent across sites in seven windy states.
• SECI should come out with four 4.2 GW bids in a year, distributed across the seven windy states as 600 MW x 7.
• By doing this, the current manufacturing capacity will be well utilised.
• These bids should be transparent and closed without reverse auction.
• Lower wind zones will get bids with higher tariffs and medium wind zones will get bids with lower tariffs.
• SECI must bundle this tariff and sell power to distribution companies at an average power purchase agreement (PPA) tariff of these seven windy states.
• The estimated difference in average PPA tariffs and highest/lowest tariff of any state shall be a maximum 30 paisa per unit.
• The bidders must be made accountable for delivering on time, otherwise, a penalty should be imposed.
• Additionally, NIWE can map wind resource potential and declare the PLF and wind zone at each state site.
• Project registration must be obtained through the state nodal agency before bidding and Central Transmission Utility (CTU) must create a power evacuation facility.
• CERC should come out with FiT based on the PLF of each state site wind zone, prevailing project costing, prevailing interest rates and operational expenses.
• The tariff has to be less than the state’s average power purchase cost.

Through above steps:

• Government can achieve uniform distribution of wind energy, land, evacuation and state resources across seven windy states and
• Revive closed wind turbine and component manufacturing capacity in low windy states.

Other suggestions

• There is a need for more consultation from industry stakeholders to implement the green corridor and for the transmission of power.
• Wind projects can be planned in low/medium windy sites where no major development for wind power projects has been seen.
• This includes Rajasthan, Madhya Pradesh and Maharashtra.
• There is a need for larger turbines, of 4 to 5 MW size with higher PLF to reduce the levelised cost of energy.
• Encouragement of captive and group captive with annual banking and interstate trading under Green Open Access will accelerate capacity addition.

The Wind energy market is becoming more competitive, forcing tariffs to come down. A steep increase in commodity prices and falling tariffs make the sector more competitive. In this context, the wind energy business could rebound through the use of transparent and closed bids and tariff bundling.