Wind power: Transmission gap between states a concern for capacity addition

By: | Published: October 17, 2018 2:12 AM

Inadequate transmission infrastructure has forced the government to reduce capacities offered in the upcoming auctions by more than 50% to 1,200 MW.

Wind power: Transmission gap between states a concern for capacity addition

Existing inter-state transmission infrastructure in the states with high wind potential may not be sufficient to provide connectivity to capacity bid out by central government agencies, research firm Icra said. Augmentation of transmission systems would take about 24-36 months, whereas developers are mandated to commission wind power projects within 18 months from the time letters of award are issued. Such impediments potentially pose a risk on project viability, as delays beyond six months from scheduled commissioning date would result in reduction in PPA tariffs, Icra noted.

The aggressive target of having 175 GW of renewable energy capacity by FY22 warrants major ramping up of transmission capacity. Inadequate transmission infrastructure has forced the government to reduce capacities offered in the upcoming auctions by more than 50% to 1,200 MW.

A 2,000 MW wind tender announced in April had also been cancelled due to this. The parliamentary standing committee on energy had noted earlier this year that the green energy corridor scheme has been a “non-starter”.
Icra pointed out that the payment discipline by Maharashtra discoms to wind power developers is deteriorating, with receivable position of 12-13 months as of September 2018. The situation has improved in Rajasthan, with payments being realised within 60 days against delays of more than 12 months in FY17.

The agency estimates that the imposition of 25% safeguard duty on solar cells imported from China and Malaysia would increase capital cost for a solar power project by 15%, which would warrant tariff-rise of about 30-35 paise per unit to maintain a similar level of returns for project developers. The depreciation of the rupee against the US dollar and rising interest costs also pose a challenge to solar developers, but the recent fall in the imported module prices should balance the shock to an extent, Icra noted.

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