India’s onshore wind sector set for acceleration

<h4>Policy changes have created a strong project pipeline and almost 20 GW of new wind could be installed by 2026</h4><ul><li>Wind power is needed to meet fast-rising electricity demand and decarbonisation goals</li><li>Covid, supply chain disruptions and fierce competition have delayed project implementation</li><li>Interest in wind-solar hybrids and round-the-clock power is rising</li><li>Policy changes are having a strong positive effect on the outlook for new capacity</li></ul><p>Onshore wind is becoming a mainstay of India’s power system and with good reason. Projects are being developed below the cost of new coal plant, the country’s primary source of power, providing a clean and cheap alternative to fossil fuels.</p><h4>Energy demand grows continuously</h4><p>Total power demand is rising by a compound average growth rate (CAGR) of about 6%, which is expected to increase electricity demand from 1,276 TWh in 2021 to 2,172 TWh by the end of the decade.However, despite having over 40 GW of installed onshore wind capacity, the pace of wind deployment has slowed.Following an impressive CAGR of 13 percent from 2012-2016, installed wind capacity growth declined to an annual average of 5 percent from 2016-21.Targets set by the government mean this rate of growth needs to accelerate to 15% over the next decade, according to analysis by the Global Wind Energy Council (GWEC).</p><h4>Expansion of wind energy stalls</h4><p>The slowdown can be attributed to a number of factors, such as the introduction of competitive bidding, then, in 2020-21, the impact of the Covid-19 pandemic followed by disruptions to the supply chain and delays due to India’s monsoon period.In 2021, only 1.45 GW of wind was installed, compared with an expected 2.3 GW. This was higher than in 2020 (1.14 GW), but lower than in 2019 (2.07 GW).Four fifths of these deployments resulted from central government auctioning, with the remainder roughly split between state government tenders and the commercial and industrial (C&I) sector.Fierce competition in the bidding process has led to a concentration of projects in the states of Gujarat and Tamil Nadu, which have both the best wind resources and the lowest cost of land.However, this has created bottlenecks, for example in gaining grid access, leading to delays and cost overruns.</p><h4>Capital-constrained distributors</h4><p>In addition, GWEC warns that some projects face cancellation as low-cost bidding in the current tender design leaves no room to absorb inflationary pressures in the wind supply chain. Cancellations have also occurred as a result of delays in signing Power Supply Agreements with the country’s cash-strapped distribution companies (discoms).The poor financial condition of the discoms continues to hamper state-level tenders for wind projects. GWEC expects about 1.8 GW of state level projects to come online by 2025.Offshore wind to provide major source of clean power for India.</p><h4>Demand for Round-the-Clock (RTC) power rises</h4><p>GWEC‘s report notes increasing interest in wind/solar hybrid (WSH) projects, buoyed by waivers for open access and inter-state transmissions system charges. WSH project costs are generally lower than for standalone wind and their less variable generation profile is attractive to off-takers.However, for round-the-clock power, they need to be coupled with either conventional thermal generation or battery storage.Battery storage costs remain expensive relative to thermal coupling, but falling costs should result in fully sustainable RTC power generation in the future.Despite rising this year, battery pack costs have declined by an annual 8 percent since 2018 and are expected to continue falling by about 9 percent a year until 2026, according to GWEC.Indeed, the report says: “future auctions are expected to be dominated by WSH projects, which will replace wind auctions.”</p><p>Refference:</p>