Wind power is the second biggest source of renewable energy in India after hydro power. Accounting for roughly 6 per cent of the country’s total installed power capacity, wind energy has gained momentum in India in recent years. General Manager, Renewable Energy, Water & Power, GE India, Haridas Menon spoke to InfralinePlus about the need to continue the momentum on policy front, the importance of feed-in tariffs set by CERC and the urgency to streamline processes involved in land acquisition. Excerpts from e-mail replies:
Until a few years ago, India’s annual wind generation capacity addition competed with even conventional sources. What according to you went wrong?
India is focusing on building the power generation capacity using diverse set of fuel resources, including renewable energy. Wind energy is a key contributor to the overall energy mix, where last year’s capacity addition was 3100 mw. India has the right policies in place to support long term wind energy growth. The critical aspect here is to continue the momentum on the policy front as well as ensure timely enforcement to achieve sustained growth.
The country has the potential to harness 300,000 mw energy through the wind route, against the prevailing 45,000 mw. What kind of policies can the government roll out to attract investment in the sector?
India has the right policies and regulations in place to support long-term wind energy growth. This includes feed-in-tariffs where the Central Electricity Regulatory Commission (CERC) has released guidelines for states to follow. CERC has also put in place the renewable purchase obligations which will be a key driver for the growth of India’s wind sector. It’s important that these policies and regulations are strictly enforced. In addition, the government can help streamline the processes around land acquisition, land and project permitting etc., which will make the sector more investor-friendly and encourage more Independent Power Producers (IPP) to engage in the wind sector. Facilitating access to funding at lower cost of debt will support growth momentum.
How do you see the input cost panning out in the near future?
We already have over 18 gw of wind energy installed in India. So this is a mature technology and industry. As more wind projects are developed and more local suppliers are able to produce local components at world class quality, the input costs would come down. At the same time, it is important to develop new technologically advanced wind turbines, which are capable of harnessing wind energy from lower wind speed sites. New technology development will always come at some cost, but the over-all benefits of the new technology will significantly out-weigh the costs.
Will the implementation of generation-based incentive model help the industry? What do you think is the best revenue model to push growth in this sector?
The implementation of generation-based incentive will help the industry in the short term. In the long term, with CERC guidelines for feed-in-tariffs as well as enforcement of renewable purchase obligations, the industry should be able to sustain itself. Today, the developers have various revenue models available – ranging from power purchase agreements (PPA) to trading renewable energy credits (RECs)-- potency of which will be driven by the enforcement of RPOs. It is important that the developers have such a choice of revenue models – the best revenue model really depends on the project-specific parameters. From long term project viability and lender acceptance perspective, PPAs based on CERC tariff guidelines would be the best revenue mode.
What major reforms are required in the present policies to ensure a better future for the industry?
Continued monitoring of the existing policies should provide the right boost for the sector. Adoption of CERC tariff recommendations by all wind-rich states would be helpful for the industry.
Kindly share the details of the projects that you plan to do. Why is Tamil Nadu so attractive for companies in the sector? Can other states replicate the same model?
GE is engaged in projects in several states including Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh, essentially those developed by our customers. States can create the right environment for wind energy growth by providing progressive regulations, right feed-in-tariff structure, enforce renewable purchase obligations and remove any project bottlenecks in land and project permitting.
What is the scenario on lending front? Are banks and institutional lenders willing to lend money given that it is a capital intensive sector?
Banks and institutional lenders are willing to lend money to projects that have good viability and long-term prospects. For a wind project with 20 years’ life, it is important that developers invest in the right kind of technology and track record – focusing on both performance and reliability and on services, parts and any future upgrades.
What is the project pipeline of your company and what is the capacity that you plan over the next two years? Also share the current capacity.
The target for us at is to continue to be committed to being a growth partner to India by providing our expertise and diverse product palate to help India meet some of its priorities. GE is a global leader in wind energy technology and has invested in wind energy in India for the long term. In early 2011, in line with our commitment, we set up our local assembly wind unit in Pune. The plant assembles GE’s 1.5 -77, 1.6-82.5 & 1.6 -100 models of wind turbines, which are most suitable for India’s low wind regimes. GE India has also announced that its new manufacturing facility in Pune would develop localized products and solutions for the energy sector in its first phase of operation commencing in 2013. The focus on manufacturing is in line with the need for localised products and solutions suited to Indian customers across GE’s various businesses present in the country. The facility, to begin with, will focus on Energy products and technologies driven by the industry needs for power generation, transmission & distribution, oil and gas as well as measurement and control.
(InfralineEnergy thanks Haridas Menon, General Manager, Renewable Energy, Water & Power, GE India for sharing his valuable insights with our readers. The column 'In-Conversation', is a platform to engage experts from various sectors to share their views on the different transformations happening in the Indian Energy Sector.)