Strong long-term demand outlook for wind energy sector: Icra

Credit rating agency Icra today said the long-term demand outlook for wind power remains strong mainly on account of cost-competitiveness, regulatory support and the generation-based incentive benefit.
"The long-term demand outlook for the wind energy sector remains strong, aided by the cost-competitiveness of wind energy against the fossil fuels and regulatory support in place by way of renewable purchase obligation (RPO) norms for the obligated entities, besides the financial support by way of GBI (generation based incentive) benefit," Icra said in a study.
The study, however, said the sector is facing challenges on the RPO front as over 60 per cent of 28 states are yet to meet the long-term trajectory for RPO norms.

RPOs are the minimum stipulated percentages of the total power that electricity distribution companies and some large power consumers need to purchase from renewable energy sources.
The long-term trajectory (till FY 2017) for RPO is in place only in 11 out the 28 states, the survey said.
State electricity regulatory commissions (SERCs) in 20 states have stipulated the RPO norms for FY 2015, while of the remaining eight states, Meghalaya and Uttar Pradesh have put in provisions for continuation of the prevailing RPO for subsequent years until new norms are approved by the state regulators.
According to the survey, discoms in Himachal, Karnataka and Tamil Nadu have completely met the RPO norms as specified for FY 2013, while those in Gujarat, Maharashtra and Rajasthan, the compliance is in the range of 90-95 per cent of the targeted RPO for the year.

Though the national action plan for climate change has specified minimum RPO target of 5 per cent in FY 2010, to be increased by 1 per cent every year over 10 years to reach 15 per cent by FY20, majority states continue to remain lower than the RPO trajectory.