Wind power units fail to find outlets, crisis situation brewing; what you should know

By: |
New Delhi | September 18, 2017 6:16 AM

Even turbine makers hold right to access PGCIL’s sub-stations; remedy the situation, ministry tells CERC

Independent wind power producers, especially those in wind-rich areas, are stuck in a logjam, as they are unable to find channels to evacuate power from their ongoing or upcoming projects.

Independent wind power producers, especially those in wind-rich areas, are stuck in a logjam, as they are unable to find channels to evacuate power from their ongoing or upcoming projects. They have been crowded out by other players — not only thermal power companies and solar units but even turbine makers — which had “pre-booked” the vital right to access the inter-state power transmission connectivity points, or the ‘bays’ at the sub-stations of state-run Power Grid Corporation of India (PGCIL) According to industry sources, a crisis seems to be engulfing the wind power sector as given the pace at which PGCIL grant s connectivity, it may take several months before the logjam is eased. Firms that have won the maiden — and the only — wind auction held in February, where tariffs plunged to as low as Rs 3.46/unit too are hit by the lack of inter-state transmission access. While wind power producers like Mytrah and Orange have been granted only 300 MW each in the country’s top two sub-stations coveted by wind energy projects, equipment manufacturers such as Suzlon and Inox hold transmission capacities of 1,400 MW and 1,500 MW, respectively, in the same sub-stations located in Tamil Nadu and Gujarat.

And they are in no immediate need of the connectivity. The connectivity applications by Green Infra, one of the winners in the February auction, are still “under process” with PGCIL. According to the sources, if transmission points continued to be allotted on a a “first-come-first-served” basis, many wind IPPs would be deprived of access to PGCIL bays, while several firms which don’t generate power squat on them. For example, of 3,534 MW connectivity capacity granted by PGCIL’s Tirunelveli Pool substation in Tamil Nadu, nearly 2,200 MW belongs to wind equipment manufacturers, who are not in the core power generation business. Tirunelveli is one such ‘wind-rich’ area, where nearly 50% of the February-auction projects are to be built. According to industry estimates, about 39,000 MW of connectivity applications from the renewables sector comprising solar and wind power units have been received by PGCIL. And more than 80% of these applications have been filed after the ministry of new and renewable energy (MNRE) waived inter-state transmission charges and losses for wind power in September, 2016. On its part, PGCIL wants Central Electricity Regulatory Authority (CERC) to come up with revised directives on connectivity allocations. According to the sources, however, this is the primary reason behind the delay in conducting the second 1,000 MW wind power reverse auction. Since October 4 has been set as the new date for the auction, the industry, including global investors in the sector, are waiting for the CERC’s decision on inter-state transmission access.

The current imbroglio comes a few weeks after many wind power companies were asked by state discoms to revise the power purchase agreement (PPA) terms after the discovery of lower tariff in recent auction. The MNRE noted that “squatting of connectivity by project developers who may not be serious to execute the project” is depriving connectivity to those with better project visibility. It had suggested that CERC could allow PGCIL to allocate the bays to projects which are in immediate need of connectivity. The ministry also said connectivity applicants could provide a minimum bank guarantee of Rs 5 lakh/MW. According to industry sources, IPPs used to receive turnkey projects with sub-station connectivity from engineering procurement contract (EPC) companies under the earlier state-based feed-in-tariff regime, where state transmission utilities allowed the transfer of connectivity to IPPs from EPC firms. When wind projects began to be allotted on a national scale after the launch of auctions, the sub-station access came under PGCIL’s domain, where transfer of connectivity right is not allowed under the current CERC norms.

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