The demand for wind energy is likely to go up on the back of the support available from the improved fiscal and regulatory measures, ICRA report said. The Centre as part of its National Action Plan for Climate Control (NAPCC) has set the share of minimum renewable energy in the overall energy procurement of utilities at 10% by 2015 and 15% by 2020. Even if the renewable energy procurement accounts for 6% by 2014-15, the additional wind energy capacity requirement would be at 14,000 mw in the next five years as against the current installed capacity of 11,807 mw.
The Central Electricity Regulatory Commission (CERC) has come out with several positive measures for the wind energy sector. Those measures include the generic tariff norms, pricing and norms framework for renewable energy certificates (RECs) and amendment of the provisions of the grid code. The union government?s generation-based incentive (GBI) policy should also help attract investments from independent power producers (IPPs) in the wind energy sector.
ICRA noted that notwithstanding the support available from the regulatory and fiscal measures, several constraints continue to impede the growth for the sector. The wind installed capacity stood at 11,807 mw against the of 48,561 mw. The provision of remunerative pre-tax returns (at 21% on equity) and wind-speed zone specific tariffs are positives in the tariff norms as set by the CERC. But the actual project economics remain sensitive to the extent of adherence by the wind energy projects to the CERC prescribed norms on plant load factor (PLF), capital cost and cost of funding available.
Further the report notes that the efforts made by the State Electricity Regulatory Commissions (SERCs) to ensure that their tariff norms are in line with the CERC would remain critical for the sustained investments in the wind energy sector. Since the prevalent wind tariff norms vary significantly across the states, the project economics also vary quite considerably, making the adoption of uniform and consistent tariff norms very important.
Further, wind energy projects continue to face execution-related problems such as difficulties in acquiring land, forest clearance and establishing grid connectivity. A proactive approach by utilities in strengthening the transmission network and ensuring single-window clearance by the state governments for land acquisition remains crucial.