Blowing in the wind

Wind power could help India abate up to 100 million tonnes of CO2 by 2050. By Santosh Kamath

The International Energy Agency (IEA) estimates that wind energy will reach 1,100 GW of installed capacity and meet 9 per cent of the world’s electricity production by 2030.

In India, the onshore wind potential itself is in the order of 65,000 MW. Given our long coastline, the off-shore potential is very large too. For India, wind power can address two long-term strategic objectives: (1) energy security — wind power can meet 10 per cent of our long-term energy requirements; and (2) climate change response — with close to zero emissions, it can help abate 2 per cent of our carbon emissions by 2030. Both these objectives have long-term positive impacts for our economy and we must act today to make this a reality in 2032.

India has already emerged as an important player in the global wind sector and is ranked amongst the top five global wind energy markets. With an installed capacity of more than 10,000 MW, wind energy dominates the renewable portfolio mix, taking up about 75 per cent of the overall installed renewable capacity in India. This makes a significant contribution towards combating the effects of global climate change, avoiding annual emissions of almost 15 million tonnes currently. Our calculation is based on the British Wind Energy Association estimates that one MWh of wind electricity displaces one MWh of coal-fired generation, which would otherwise have emitted 0.86 t CO2 (the PLF of wind power plants has been taken at 20 per cent).

Tamil Nadu leads other states in installed wind power capacity in India. What has aided this growth is its strategic location with very good potential wind power sites. For example, the Muppandal region in Kanniyakumari district has a plant load factor in the range of 30-32 per cent, against the normal range of 22-25 per cent. Tamil Nadu is also one of the first states in India that announced a tariff for wind power. While Tamil Nadu leads the pack, other states like Maharashtra, Gujarat and Karnataka are following in its wake.

All in all, several factors have contributed positively towards wind sector growth.

One, fiscal incentives like accelerated depreciation and feed-in-tariffs for the wind sector made it popular amongst investors looking for new ventures. There has, however, been some criticism from various quarters that despite the installed capacity being close to 10 per cent of the total generation capacity in India, actual generation remains quite low. This can be attributed to capacity getting installed at relatively low-potential wind sites and inadequate O&M measures. In this context, the generation-based incentive scheme announced by the government is a step in the right direction. It will incentivise generation and result in higher efficiency.

Two, the renewable purchase obligations made it mandatory for state utilities to procure power from renewable sources like wind. Many state governments have come out with wind power policies that allow for wheeling, banking and third-party sales.

Three, wind power is much closer to grid parity, the point at which it becomes competitive with grid power, when compared to other renewable technologies like solar. Given the rising cost of conventional fuels, the high power deficits prevailing in the country today and the relatively shorter gestation period for wind power projects compared to conventional power projects, various states are now keen to promote this power source.

Four, the emergence of Indian manufacturing players like Suzlon has catapulted India into the league of major wind manufacturing countries. A manufacturing base in the country provides the capabilities for long-term scalability and cost efficiency of wind power in India.

While the progress made by India is very encouraging, there is still a large untapped potential from onshore as well as offshore wind farms which needs to be harnessed. This calls for a renewed effort from all the stakeholders involved to address certain key challenges facing the wind sector.

First- and perhaps the most important- is access to good potential wind sites. With good wind sites becoming scarce, there is intense competition for the remaining sites. Moreover, the process of acquiring land itself is quite cumbersome and leads to inadvertent delays. In contrast, it needs to be noted that once constructed, the actual turbines in a wind farm occupy only about 1 per cent of the land area taken by the whole development. This means that agriculture or other activities can continue right up to the base of the turbine. Therefore, minimising cumbersome procedures to facilitate speedy implementation is the need of the hour. As a special case, the government needs to step in and clearly define criteria or guidelines for land acquisition and rehabilitation specifically for the wind sector.

Second, regulatory uncertainty remains another area of concern. There have been instances in the past of state-level policies that have undergone change during the course of the project life. Moreover, wind energy due to its unpredictability cannot be forecast or scheduled, unlike other conventional fuels. This limits the possibility of trading wind power. The guidelines relating to trading and transmitting wind power need to take this characteristic into account.

Third, strengthening the transmission grid to accommodate new wind power capacities requires investment and needs to be done with priority. The regulatory framework at the state level to develop these capacities and share costs between wind power generators and other grid users needs to be balanced and equitable. Suitable mechanisms to fund these investments, such as for example a cess on conventional generators or large consumers, should also be explored so that the state transmission utilities are not overburdened.

Finally, domestic R&D capability needs to be strengthened. Offshore wind farms are the next big thing to happen in the wind sector. There is a lot of research happening in this area globally. A report by ODS-Petrodata estimates that global offshore wind capacity could reach 55 GW by 2020, up from the 1.5 GW installed currently. Given the enormous size of the opportunity, India cannot be a laggard on this front. India needs to be proactive and take a leadership role in research efforts. The first step in this direction would be to set up wind monitoring stations to assess the offshore wind profile of India.

In summary, wind power has great potential as an alternative energy source for India from the perspective of both long-term energy security and as a response to the call for action on climate change. By 2050, according to IEA estimates, wind power could help India abate up to 100 million tonnes of CO2. That would be a significant contribution indeed. n

The author is Director, KPMG Advisory Services