In an attempt to keep Infraline Energys’ readers abreast with the key issues and challenges engulfing the sector, Infraline Energy tries to bring forth the opinion of key personnel whose decisions and opinion play a vital role in shaping the sector. Please find below excerpts from the interview that Infraline Energy conducted:
Wind power industry remains wary of competitive bidding as it has got a foretaste of things to come in SECI’s first auction of wind power projects, though it may not say so in so many words. The record low tariff of Rs 3.46 a unit does not augur well for generators as it could bring pressure on their margins. Discoms have already started backtracking on signing of PPAs at agreed tariffs with wind power generators as a pressure tactic. Against this backdrop, DV Giri, Secretary General, Indian Wind Turbine Manufacturers Association takes questions from InfralinePlus about the industry's future. Excerpts:
What do you think about the tariff discovered through competitive bidding for wind power projects? Do you think such a low tariff is sustainable over the long term?
The first SECI tender at Rs.3.46 per unit discovered through a transparent process meets the requirement of the competitive bidding process. It is too early to comment whether this would be the benchmark as sites of Tamil Nadu with high PLF and ISTS waiver helped the bidders to quote this price.
Future bids will be governed by Plant Load Factor (PLF), interest rates the developers are able to get from their lenders, ISTS waiver currently available up to 2019 and size of the bids proposed by SECI. Till now, there are only two tenders of 1 GW each announced by SECI.
As one is aware, many states are also looking at competitive bidding and this may happen after guidelines are issued by Ministry of Power / Ministry of New and Renewable Energy under Section 63 of the Electricity Act. Again it is premature to comment on the bid levels of the SECI bid and state bids as they are on different platform.
Is there any sign of financial stress in the wind power sector?
After the record installation of 5400 MW in 16-17, the first SECI bid is not operational yet and various states are planning for competitive bidding instead of feed-in tariff, which has made the industry to go through a period of transition at least in the financial year 17-18. Wind projects are planned 18 to 24 months in advance under project planning and inventory with different lead time. Naturally the original equipment manufacturers have made large investment in the manufacturing sector will go through a difficult temporary phase on this account.
If solar sector can live with competitive bidding, why not wind power industry?
The wind fraternity is not against competitive bidding and there was an overwhelming response to the SECI bids 1 and 2. However, wind and solar cannot be compared. The downslide of international module prices from China and Taiwan has made the tariff crash. As against this scenario, wind is a mature industry with manufacturing facilities in the country with 75% localization and sophisticated technology which is state-of-the-art. Further, wind is very site specific and tariff will depend on the PLF which can vary from site to site. Therefore, comparing wind and solar, apple to apple, may not be correct.
Do you think India will achieve 60 GW wind generation capacity addition target by 2022? If not, what else the government should do?
The government has set a target of 60 GW by 2022 and this can be achieved as there is adequate manufacturing, high level of participation by IPPs with sound financial support. However, success towards achieving 60 GW will depend on strict compliance of National non-Solar Renewable Portfolio Obligation and connectivity, both intra and interstate.
MNRE target for 16-17 was pegged at 4,000 MW and the industry has made a record installation of 5,400 MW. It is interesting to add that the industry in the last few years has always exceeded the government target which speaks a lot for the industry and government's encouragement to wind industry. Electricity is a commodity and tariff or bid price will find its own level as time goes by. Therefore, 60 GW is definitely achievable.
How is the industry’s response to the Re-powering scheme launched by the government recently?
Re-powering is a must with old turbines occupying the best wind sites. Policies or guidelines may require changes as we have not made a big headway into re-powering. Several options are available as there are issues in substation capacity, existing PPAs, disposal of old turbines and current owners of the land are reluctant to give up their land. Power being a concurrent subject; it is possible to have a state re-powering policy. The bottom line is, re-powering can bring in about a capacity addition on an estimate of 1,000 MW to 1,500 MW and can go up if grid connectivity and substation capacity can be augmented.
Infraline Energy would like to thank the contributor for his/her valuable time and opinion shared on the topic.