Despite the demand for harnessing non-conventional energy resources, the wind power industry appears to be slowing down. In the absence of a uniform tariff regime, uncertain regulatory and policy incentives, inadequate grid connectivity and delays in acquiring land are some of the reasons for under-utilisation of the country’s wind power manufacturing potential.
It has been forecast that India’s wind power market will see the current annual addition of around 3,000MW go down to 1,900MW by 2020.
Though India has an annual manufacturing capacity of over 9.5GW of wind turbines, the country has been seeing only about 3GW in annual installations under the 12th Plan target, said the third edition of ?India Wind Energy Outlook 2012?, brought out jointly by Global Wind Energy Council, World Institute of Sustainable Energy and Indian Wind Turbine Manufacturing Association, at Wind Power India 2012, held in Chennai.
While the broader global slowdown has reduced expectations from the wind sector for fiscal year 2012-13, the reduction in the accelerated depreciation benefit from 80% to 35% in the first year of wind turbine operations has the industry struggling to cope with the changed scenario. The government has been offering three key incentives, namely accelerated depreciation (AD), generation-based incentive (GBI) since 2009, and renewable energy certificates (REC) mechanism since 2010.
?A fundamental reason for the growth had been the availability of AD benefit. With the quantum of this reduced under the current Plan (from April 1, 2012), the other scheme called GBI has become a vital incentive for the wind sector. Though likely to be reviewed in the near future, GBI is also now in abeyance,? says the report.
Tariffs vary across the state and remain fixed for a longer control period, impacting returns for new projects commissioned under this tariff regime. In FY 2011-12, some of the state utilities, such as Tamil Nadu, delayed feed-in-tariff (FIT) payments to wind power generators by over a year, which adversely affects investor confidence in the sector. The report points out that inadequate grid infrastructure was another key issue that needs to be addressed. In most states with significant wind potential, the grid does not have sufficient spare capacity to evacuate the ever-increasing amounts of wind power.