Wind power tariff to increase amid rise in projects

The prices of wind power are expected to increase in the backdrop of more projects from the Centre and the State governments. The industry expects investments of around Rs 600 billion each year over the next two years.

Prices started increasing since last month as Adani Green Energy and KCT Renewable Energy had offered to supply electricity at Rs 2.85 per unit in their bids for 75-megawatt (Mw) projects each. The tariff may cross Rs 3-3.5 per unit in the near future.

Industry experts said wind power tariffs fell below Rs 2.50 per kilowatt hour (kWh), with the lowest at Rs 2.43 in a 500-Mw reverse auction conducted by the Gujarat Urja Vikas Nigam last December. In February, the largest wind auction of 2000 Mw capacity, conducted by the Solar Energy Corporation of India (SECI), saw the winning tariffs at Rs 2.44 and Rs 2.45.

The industry has regained momentum as there is a clear business visibility with the announcement of bids by the Ministry of New and Renewable Energy, said the Indian Wind Turbine Manufacturers Association (IWTMA).

While competition for a limited number of bids in the recent past has resulted in a decline in tariff, it will bounce back as there are enough projects coming up in the near future, said D V Giri, secretary general of IWTMA. The Association expects to meet the government’s target of 60 gigawatts (Gw) of wind energy generation before the March 2022 deadline. 

The cumulative installation of wind power capacity was around 34 Gw in 2017-18. Tenders floated for wind energy till April 2018 were around 12.5 Gw, which is expected to be completed in 18 months.

The Centre and the State governments will bid another 10 Gw each in 2018-19 and 2019-20. The industry is on course to adding around 30Gw in the next three years. The installations in 2017-18 were around 1.76 Gw through the non-bidding route.

Tulsi Tanti, chairman of IWTMA and chairman and managing director of Suzlon Energy, said: “In FY18, the wind industry witnessed a transition from the feed-in-tariff (FiT) to the competitive bidding regime. Hence, there was a temporary drop in volumes”.

The visibility of continuous volumes in the coming years signals gradual stabilisation of tariff, which will also depend on wind regimes in different states, he added.

“We are seeing large-scale projects of 200–300 Mw capacity, which brings in advantages of scale at the project level, leading to cost optimisation by benefiting working capital of companies,” said Tanti. 

Manufacturers are working towards bringing down the levelised cost of energy and increasing plant load factor (PLF). The next generation turbines from leading manufacturers can deliver 35-40 per cent PLF in high wind states, which is almost twice the PLF compared to solar power.

The industry has a healthy order pipeline, owing to auctions by the SECI and state-level bids in Tamil Nadu, Gujarat and Maharashtra.