More Problems for Wind Energy in India

We at Greenworldinvestor, have already discussed how wind energy in India is facing pressure from the lower prices of solar energy being generated. With solar power being priced at INR 4.5-5/kWh, wind producers are facing difficulty in signing PPAs with utilities for higher prices. Also with solar prices expected to dip, distribution utilities are preferring not signing long term agreements at all even with thermal power producers.

Wind energy is also facing a threat in its existing capacity. Most of the wind capacity are located in states such as Rajasthan and Tamil Nadu. These states have distribution utilities which are sitting on massive losses and debt. There are reports that almost 40% of India’s wind capacity is facing the pressure of payments from utilities in states like Maharashtra, TN and Rajasthan.

Read List of Wind Companies in India.

While curtailment due to grid security is cited as the reason not to buy wind energy, people are suspecting that discoms are using this excuse not to buy power at all, as there is a power surplus in most states. Tamil Nadu which used to be a chronically power deficient state has suddenly become a power surplus state, with its CM pushing the national government to build an interstate transmission capacity from the state so that it can export the surplus wind power that it now generates. TN has suddenly seen its power capacity surge by 3000 MW in the last one year – around 1000 MW from solar and 2000 MW from nuclear energy.

With the central government planning an ambitious 60 GW of wind power capacity by 2022 up from around 30 GW at present, the reality is far different from the government planning.

Wind power is facing multiple threats now:

• Payment delays from discoms
• Power curtailment from discoms
• Lower priced solar power being sold in the markets
• Generation Based Incentive of 50 paisa/kWh may be removed next year
• Major states like Gujarat are not signing PPAs with wind farm developers

One of the easiest ways to solve the problems is by building enough transmission capacity, so that this power can be moved from the surplus areas to where the demand is high. While 200 million people or more in India do not have access to electricity, the current generation is said to be in surplus. Till those people get connected and have enough money to pay for power, this situation will persist. With the government planning to build at least 10 GW of solar power every year, things do not look great for power producers especially from the wind and coal power sectors.

These states, along with Madhya Pradesh (MP), have also asked power producers to curtail generation by 50 per cent or more. Wind power producers operating in these states include Suzlon, Enercon, Gamesa, ReNew Power, Hero Future Energies, Orange Wind Energy, NuPower Renewable, NSL Renewable and Inox Energy. Rajasthan has asked producers to curtail generation by close to 40 per cent and Tamil Nadu by 20-30 per cent. The period of peak wind power generation matches peak demand during summer.  “Lack of inter-state transmission capacity is hurting our generation plans. The consumer cannot make most of the surplus wind power available during summer,” said an industry executive.

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