Wind industry getting into a ‘distress situation’

After soaring to a record 5,400 MW of installed capacity set up in 2016-17, the Indian wind industry is heading for a sharp nosedive this year. By the looks of it today, installations in 2017-18 could barely cross 1,000 MW.

“It is a distress situation”, says Ramesh Kymal, Chairman and Managing Director of Gamesa, a leading wind turbine manufacturer.

The reason for this is that the state governments are holding back.

Regime change

The industry is trapped in the transition in the way wind energy tariffs are determined. Earlier, electricity distribution companies (most of which are owned by state governments) would sign power purchase agreements (PPAs) with wind energy companies, such as ReNew Power and Hero Future Energies, on the basis of ‘feed-in tariffs’ fixed by the respective state’s electricity regulatory commission. These FiTs used be in the neighbourhood of ?5 per kWhr. Armed with the PPAs, the energy companies would put up wind power projects, placing orders on turbine manufacturers such as Gamesa, Suzlon and Vestas.

In February, the Union government came out with ‘tariff-based competitive bidding’, auctioning 1,000 MW of capacity. Wind energy companies that offered to sell at the cheapest prices would get to sign PPAs, and then set up wind power plants. Because of competition, the tariff fell to a low of ?3.46 per kWhr.

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