India?s ambitious capacity addition programme in wind power generation could get derailed as a slackening demand in renewable electricity threatens to turn off investors.
Power distribution companies (discoms), which are supposed to anchor the demand for renewable power, are avoiding buying costly wind power because of their poor financial health. As a result, the wind power industry has been left in the doldrums.
More than 1 lakh renewable energy certificates (RECs) issued to windmills by electricity regulatory commissions are lying unsold due to lack of demand. These certificates are valid for one year. Due to lack of demand, most of them are facing the prospect of lapsing, according to industry sources.
What has added to wind power generators? woes is the fact that supports like ?generator-based incentive? and ?accelerated depreciation? the industry was relying on have been withdrawn without any replacement. Wind power tariff varies from Rs 5 to Rs 6 a unit, compared to discoms? estimated average power procurement cost of Rs 3.5 a unit. Windmills need incentives to compete with conventional sources of electricity like coal and hydropower at the grid.
Wind turbines account for over 70% of India?s renewable power generation. Under the current 12th Five Year Plan, the government has envisaged 15,000 mw capacity addition in wind power, which would need an investment of R90,000 crore. The government is banking on private investment to achieve the target and if they flee, the capacity addition target could be missed by a huge margin.
The regulatory regime exhorts discoms to procure a certain percentage of their overall power from renewable sources or buy RECs. But with no provision for penalty on default, there is little pressure on states to buy renewable power.
Saddled with unsold RECs, wind power generators have requested the central electricity regulatory commission to provide a one-time extension for lapsing certificates. ?Until renewable power purchase becomes mandatory and attracts penalty, validity of RECs should be kept open ended,? said Indian Wind Turbine Manufacturers Association secretary general DV Giri.
The National Action Plan on Climate Change ( NAPCC) stipulates sourcing of 15% power from renewable sources by 2020. Wind power can help India meet the target with the potential estimated at over 1 lakh mw. If the wind power capacity addition programme falters, the NAPCC target could remain elusive.