Wind Power Installations & Tariff Dynamics in India: Tracking the Breeze of Change!

Wind Power Installations in India – A Know How

India is the fourth largest annual wind power market across the globe and provides great business opportunities for both domestic and international players. Wind energy in India currently dominates the overall renewable energy portfolio with driving close to 61% of it. It is significant to note that with a single digit capacity of about 7GW in 2006, wind power generations in India have reached to a level of 28 GW during 2016.

However, past trends clearly indicates the development trajectory of  wind power installations in the country but given the impetus that solar energy has received in last two years, a certain slow down in the growth of wind energy market has been witnessed in India

Performance of Indian States for Developing Wind Energy

With the re-introduction of Accelerated Depreciation (AD) benefit in 2014 and extension of Generation Based Incentives (GBI) till 12th FYP in the Indian wind power segment has given a significant boost to the wind power installations in the country. Additionally, the impetus that Indian government is giving on developing the renewable energy sources, is certainly indicating a strong market for all the RE players including wind power value chain players as well.

India is targeting to achieve a grid connected wind power capacity of 60 GW by 2022 of which nearly 46% has been achieved during 2016. The total wind energy installations in India stands to be 28.41 GW as on November 2016. Of this total capacity , nearly 11.94 GW has been the contribution of southern region states. Tariff Trends and Outlook in India for Solar and Wind Power Sources-3 Tamil Nadu being the leader , drives about 64% of the cumulative southern contribution , followed by Karnataka & AP to cover about 35% of it. Since wind power developments in Kerala and Telangana are at a very niche stage, hence their contributions stands to be only 1%. It is pertinent to note that the cumulative wind power capacity of these two states stands to be around 50 MW as on November 2016. Given below is the region wise breakup of wind power installations in India as on November 2016.


Future Outlook : Estimated Targets for Wind Power Installations

India is targeting a renewable power capacity of 175 GW by 2022, to which the likely contributions from wind power shall be 60 GW. However, continuing the legacy Tamil Nadu is anticipated to dominate the total wind power capacity in 2022 as well, which can be observed from Exhibit 02. But, significant improvement in the capacity addition of Andhra Pradesh , Madhya Pradesh & Telangana is also likely to be witnessed. It is noteworthy that the trio is projected to see a three fold increase in their wind power capacities in 2022 than that observed in present.

Further, states on the western front too are anticipating good capacity additions in their existing wind portfolio. For instance, the targeted wind power capacity in the state of Maharashtra is 7.6 GW, where as Gujarat is targeting to achieve a capacity of 8.8 GW by 2022. Also, with a projected growth of 19.4% , wind power installation in Madhya Pradesh is projected to go beyond a level of 6 GW by 2022.


Wind Power Tariffs in India, Tracking the Trajectory of Last One Decade

Unlike solar energy, wind power tariffs in India were significantly low way back in 2008-09 as well. Where, average cost of solar power generation in India was touching INR 17-18/unit, cost of generating wind energy was very close to that of thermal installations. It is pertinent to note that the average wind power tariffs in India hovered around INR 3 – 5/unit in the major wind states during 2008-09. The least per unit costs were recorded in the southern region states with the tariff range varying in a bracket of INR 3.1-3.5/unit during 2008-09. It is pertinent to note that with INR 3.14/unit of tariff, lowest wind power tariff was witnessed by Kerala during 2008-09. However, due to weak policy and regulatory environment, the state was not able to exploit a significant capacity against its potential. But, like other southern regions Kerala too is now adopting attractive policies and working in line for providing favourable business environment not only to the wind power developers but to the other RE players too in order to increase its renewable energy portfolio.

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Western region states too have observed some prominent movements in their wind power tariffs over the last decade. For instance, Gujarat has witnessed a hike of close to 24.3% in the per unit cost for generating electricity from wind during 2006-2016, whereas Maharashtra saw a fall of 8.5% in the average wind power tariffs from 2014-2016. In Madhya Pradesh too a similar trend was observed with an increase of 6.2% in the average wind tariff from 2008-2016.

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The views expressed in this article are a part of our latest publication Direct Power Purchase Agreements in India-2016.To view the detailed content & coverage click here

*The views expressed in this article are solely those of enincon perspectives and do not necessarily represent those of Enincon LLP.

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