Public interest in renewable energy in India has picked up only in recent years. But the silhouettes of windmills on the horizon are no novelty to the country, having been around for more than two decades. With an installed capacity of 35.6 gigawatts (GW) and a total potential for over 300 GW at conservative estimates, onshore wind in India can accelerate the country’s clean energy ambitions.
However, wind speeds have been slowing in the sector, causing much angst for developers and manufacturers. New capacity addition was less than 2 GW for the last two years. Despite a project pipeline of over 10 GW, the trend in low annual capacity addition is expected to continue this year. Wind turbine manufactures are operating at unsustainable capacity utilisation rates of less than 20 per cent. According to the Council on Energy, Environment and Water (CEEW), workforce needs in wind project implementation dropped to 1,140 in 2018, 73 per cent lower than in 2016. How can we save our homegrown wind industry before it is too late?
The first signs of trouble appeared soon after the sector shifted to reverse auctions, from the 15-year-old feed-in-tariff (FiT) regime. With an aggressive bid within the first year, the sector achieved the lowest tariff discovered for renewable power in the country, Rs 2.43/kWh (in December 2017). After the auction, developers started scrambling to procure land and secure connectivity to evacuation infrastructure. Wind power relies on geographically concentrated resources where getting contiguous land can be arduous. More than 60 per cent of the capacity auctioned in 2017 has not yet been commissioned and is behind schedule owing to land and connectivity issues.
How do we solve these issues? Policymakers must choose between two approaches: To distribute the capacity or distribute the energy generated.
Distributing capacity means tapping into wind resources available in medium-to-low wind power density (WPD) regions. While Tamil Nadu and Gujarat have the highest wind speeds and account for 39 per cent of the total wind potential in India, (according to the National Institute of Wind Energy), there is an aggregate potential of 184 GW in other medium-to-low WPD regions. Commissioning wind farms in these states could reduce stress on land and evacuation facilities, potentially reduce the investment required for inter-state transmission infrastructure, and reduce the overall cost of integrating wind power into the grid.
Tamil Nadu and Gujarat have the highest wind speeds and account for 39 per cent of the total wind potential in India
However, lower wind speeds would mean higher levelised cost of electricity. CEEW analysis indicates a 6 to 36 per cent increase from current ceiling tariffs but comparable with the national average power purchase cost for conventional generation. In order to optimise energy production from low-WPD sites, there is need for policy support to give incentives to develop advanced turbine technologies, which could tap low wind speeds.
For the second approach — distributing the energy generated — to work, effective mechanisms are necessary to transfer power from point of generation to the nearest transmission network and to the periphery of offtakers’ networks. The Renewable Purchase Obligation (RPO) mechanism is meant to facilitate the inter-state transfer of power. But compliance of distribution companies with RPOs is staggeringly low. Stricter compliance would go a long way to facilitate inter-state power exchange. Strengthening existing market mechanisms, such as power trading and open access, with regulatory and technological means would be another option. Agile power procurement planning by distribution companies, effective open access regulation across states, and developing advanced electricity market are among the measures that could move the needle.
Additionally, inter-state and intra-state transmission networks need rapid expansion to keep pace with renewable energy deployment to pre-empt a real technical constraint in power transmission across the country. Large injections of variable renewable energy within a regional network would also need additional investments in grid balancing technologies.
Regardless of the approach chosen, India has to rethink the way reverse auctions are conducted. In their current form, reverse auctions will not encourage exploration of low-WPD sites. Nor would they ensure smooth commissioning of plants in high-WPD areas. Site-specific auctions with a ceiling tariff estimated for the chosen geography could support optimum wind farm designs — and more realistic tariffs. The procedure for Long-Term Open Access of the transmission network and substation connectivity also needs to be streamlined with the auction process. This would ensure that the timelines for plant commissioning and network expansion are in sync. This reformed approach would facilitate more capacity being commissioned annually, giving the industry a more stable growth path.
India may or may not meet the wind energy target of 60 GW by 2022. But obsession with targets and lowest tariffs, alone, is a bit like tilting at the windmills. Saving wind energy from the doldrums would need accurate assessment of the costs (of generation and transmission), streamlining the auction process (to give incentives for innovation), and far better enforcement of regulations.