Unwillingness on the part of state discoms to sign long-term purchase agreements at the higher feed in tariffs is likely to affect wind power generation as only 1,000-1,500 MW of capacity is likely to be added in this financial year, India Ratings (Ind-Ra) said today. According to the rating agency, there could be a substantial dip in capacity addition in FY18 to 1000-1,500 MW from about 5,400 MW in FY17. “This will be because of the unwillingness of state discoms to sign long-term purchase agreements at the higher feed in tariffs and unpreparedness on their part to come out with auctions in a big way in the near term. However, auctions can pick up from FY19,” it said. Ind-Ra further said though the Ministry of New and Renewable Energy has come up with detailed policies on repowering, hybrid and offshore wind power projects in the past, ground challenges and bottlenecks hinder a speedy progress on these fronts. “Distributed ownership of land and non-availability of contiguous land, due to urbanization in between, pose the biggest challenge to repowering the wind projects nearing the end of their life,” the agency said.
According to the rating firm, although a higher 200- 250 bps equity internal rate of return can be earned in repowering projects than new plants, these practical limitations can dampen the process and limit the overall progress to a fraction of the overall potential of 3,000 MW estimated by the ministry. Ind-Ra further said hybridization of the wind with solar power has major advantages as wind power peaks at night and solar power peaks during day hours, perfectly complementing each other. “Besides, there can be saved on the land and evacuation fronts. However, infrastructure bottlenecks are preventing hybridization of the existing wind power plants, while the same can be planned for upcoming plants.”
According to Ind-Ra, hybrid plants can offer about one percentage point higher returns than an individual wind or solar power plant without trackers. Given the marginal nature of incremental returns, industry players prefer to wait and watch before going up for the same in a big way.