Future Prospects for Wind Energy in India

<p>Wind energy in India has huge potential, with its cost of generation being 40 percent lower than that of conventional sources of power, according to the Global Wind Energy Council, which has released a study titled “India Wind Energy Market Outlook 2022-2026”.The levelised cost of energy (LCOE), or the net present cost of generation for a generator over its lifetime, for wind is expected to be Rs 2.8-3.3/Kwh, the study says.The prices of wind-energy instruments like turbines have risen owing to the increase in global logistics costs and the recent surge in goods and services tax. Despite these hiccups, India is expected to install more than 19 Gw in the next five years, peaking in 2024, says the study. Also, over the next five years, a transition is expected from standalone wind to wind-solar hybrids (WSHs).</p><p>Developers are taking a greater interest in central auctions due to a change in government policy. Due to states delaying the signing of power-sharing agreements (PSAs), the tenders of Solar Energy Corporation of India (SECI) specify which state discom would procure the power generated. This is expected to reduce project cancellation or delay on account of signing PSAs.This has come after many changes made by the government. Earlier in 2003, the wind energy sector ran on a tax-benefit scheme called Accelerated Depreciation (AD), which anyone setting up or investing in a wind farm could take, while a portion of the project cost was repaid by the Centre.</p><p>Also Read: French PM calls on companies to prepare energy plan amid energy crisis .In 2011, the government announced the generation-based incentive (GBI) scheme while retiring the one on AD. The GBI scheme provided wind power producers an incentive of 50 paise for each unit generated. This ended in 2012 but resumed in 2013.To improve grid availability, SECI specified land and grid details of the delivery point in the tender document before auction.The government has removed tariff caps, which has resulted in increased bidding as well as a lower price of about Rs 2.7/Kwh, as compared to about Rs 2.8/Kwh. It has reduced performance bank guarantees (PBGs) from 8-10 per cent from November 2020 to 3 per cent in 2021. The rate will remain for renewable tenders issued until March 31, 2023. It also removed capacity restrictions on repowering existing projects. Earlier, excess generation could be sold only to SECI and at 75 per cent of the rate in the PPA. It has also taken out the obligation to sell excess generation to SECI only and allowed third-party sales of projects.</p><p>According to the study, the major driver of future installations is renewable purchase obligations (RPO) notified by the central and state governments. The Ministry of Power has laid out a road map for purchasing renewable power, whose share will increase from 6.94 percent to 43.33 percent of the power purchased by discoms by 2029-30.By 2025-26 the share of wind power is targeted at 33.01 percent. Considering this trend, India is expected to install nearly 19.4 Gw of wind capacity, 76 per cent of which will come from central tenders, followed by state utility markets, and lastly commercial and industrial segments.</p><p>Solar energy has the lowest LCOE, followed by wind, and the wind-solar hybrid. Wind has stronger capacity utilisation, a more consistent daily generation profile, and lower societal costs, marginal costs for dispatch, balancing costs. However, solar will remain a cost-competitive and complementary resource alongside wind towards 2026, says the study.One of the major challenges discoms face is the lack of round-the-clock power supply from renewable energy due to its variability in generation. Owing to this, they are forced to depend on conventional sources like coal.</p><p>According to the study, discoms require a firm and consistent supply of renewable energy to maintain grid stability, so there needs to be a balancing source of power. Hence, WSHs, coupled with battery storage, provide round-the-clock power for consumers. But high battery costs mean this solution still needs to gain in competitiveness against conventional sources. The study finds lithium-ion battery pack prices, which were $186/Kwh in 2018, have decreased sharply to $132/Kwh in 2021. In the medium to long term battery pack costs are expected to decline at a compound annual growth rate of 9 per cent until 2026 and dip below $100/kWh that year. This will lead to a decline in co-located storage costs at a CAGR of 6 per cent until 2026. Hence, the expected fall in battery prices by 2026 would make WSH, combined with storage, a viable proposition in comparison with conventional generation sources.</p>