India wind energy will suffer

The Indian wind energy sector which did spectacularly well in the first decade of this century, cannot catch a break in the second decade it seems. The industry has been facing multiple issues which have stalled the growth rate for this RE technology. In the earlier years the wind turbine industry faced a sharp slowdown, as the federal government removed the twin subsidies of accelerated depreciation and generation based incentive (GBI). This led to a slowdown as the IRR from wind farms declined, and most large profitable companies which used to buy wind turbines to get tax breaks stopped. After the new NDA government brought back the subsidies, the wind sector returned to its old run rate of 2-3 GW a year, but growth has not come back. The reason is that solar energy has become the preferred mode of RE generation for the government. Even the target for solar energy is 60% more than wind energy at 100 GW. The government has not been too aggressive on the wind energy side as compared to the solar energy sector, where all central agencies such as NTPC, SECI, CEA and MNRE are working day and night to increase capacity at a rapid rate. Wind energy has become a step child for the renewable energy authorities in India.

Wind energy is also going to suffer going forward, as solar energy prices have become lower than wind to everyone’s surprise. Solar energy is also seeing a secular decrease in prices due to technology improvements, which is expected to lead to another 40-50% fall over the next 10 years. Wind energy like other energy forms cannot simply compete with the declining cost curve of solar energy. Governments now prefer solar energy over wind energy as they are easier and faster to build. They do not require windy sites and also lead to more jobs.

In India wind energy industry is also facing the looming threat of a uniform goods and service tax throughout the country, which would raise their costs by 5% due to increased taxes. On top of that, higher import duties on steel will also make the steel towers costlier. Both of these developments could lead to a 10% higher cost which is concerning for the industry, which is already battling solar energy for resources. The wind energy association is lobbying the government to make an exception for the wind energy both on GST and for both steel plate duties.