The wind power sector which dominated the renewable energy basket of India, has lost its leading position to solar power in the past few years.
Even though the wind is infirm, it can still generate energy at night.
However, the capacity addition, which picked up momentum in FY2012 with an addition of 3196.66 MW, slid drastically in the following years. It was only in FY2017 that the country saw the capacity addition crossing the 5 GW mark (5364.78 MW).
The stakeholders have bet over the past ten years on adding 5 GW annually to facilitate the energy transition. However, the sector has been plagued by several problems, including funding issues.
That is not all, the segment has seen a major transition- from WT manufacturers to IPPs, which also affected capacity addition in the last decade. Though the wind power market has evolved both in terms of technology and pricing, it continues to struggle.
However, a new report by the rating agency Crisil shows some green shoots.
As per their observation, the nation’s wind capacity addition is anticipated to increase from 9 GW between fiscal years 2021 and 2024 to nearly 25 GW between fiscal years 2025 and 2028, a 2.5-fold increase. That is more than twice as much as the most recent capacity addition. This also calls for an investment (capex) to the tune of Rs 1.8–2 lakh crore.
Variable data:
According to Crisil’s analysis, India increased its wind capacity by 3.0 GW annually between the fiscal years 2014 and 2018. The Ministry of New and Renewable Energy’s data, however, paints a different picture and indicates that, during this time, capacity addition ranged from 1865 MW to 5502 MW. This is supported by other reference data points such as that of the National Institute of Wind Energy and the IWTMA.
The pace did slow down to an average of 1.7 GW between fiscals 2018 and 2023 owing to a lack of connected sites with high wind potential and diminished returns for developers from aggressive bidding.
So what will enhance the wind capacity addition?
a) A ramp-up in auctions of wind and hybrid projects (including storage-linked projects)
b) By constructing transmission infrastructure to wind sites
c) Improved financial profiles of wind original equipment manufacturers (OEMs)
d) Viable tariff bids
The policies/ initiatives rolled may strengthen the prospects of the wind sector.
For instance, the government has set a target to auction 50 GW of renewable projects every year, including 10 GW of standalone wind projects for specifically reinvigorating wind capacity additions. This has already led to the auction of around 5 GW standalone wind projects since the start of fiscal 2023, vis-à-vis around 3 GW auctioned in fiscal 2021 and 2022.
Auctions of hybrid and storage-linked projects are also on the rise—up from 4 GW in fiscals 2021 and 2022 to nearly 18 GW in fiscals 2024 and 2023.
The way forward:
Crisil observes that as transmission connectivity and wind OEMs’ financial standing have improved, supply-side constraints have begun to ease.
Additionally, the government is developing transmission infrastructure to improve connectivity to sites with high wind potential and plans to increase connected capacity for wind sites from ~50 GW as of December 20224 to ~75 GW by March 2025 and ~100 GW by December 2027.
That said, these estimates remain sensitive to progress on the construction of transmission infrastructure and prices of steel and cement, which could impact the cost of projects and, thereby, the viability of current tariffs.