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Wind energy picks up steam

Sector adds record 3,472 Mw installation in FY16; 4,500 Mw set to be added in FY17

T E Narasimhan  |  Chennai 

Wind energy picks up steam

FY16 saw the highest installation in a year at 3,472 megawatt (Mw), up 50 per cent from the previous year. The last time the sector witnessed such frenzied activity was in FY12.

Around 4,500 Mw is expected to be added in 2016-17 across the country, as the 'accelerated depreciation' (AD) is coming to an end in March 2017.

AD is a tax benefit scheme that can be availed by anyone who sets up or invests in a wind farm irrespective of the power generated. About 80 per cent of the project cost is paid back if the plant is commissioned before September 30 of the financial year concerned or 40 per cent of the cost if commissioned before March 31.

The challenge continues to be the delay in payments, signing of power purchase agreements by state electricity boards. D V Giri, secretary-general of Indian Wind Turbine Manufacturers' Association (IWTA) said that wind installation hit a high of 3,197 Mw in FY12 as generation-based incentive and AD came to a close in March 2012. It dropped to 1,700.30 Mw in FY13 and thereafter started growing slowly.

Wind energy picks up steam
Notably, Madhya Pradesh attracted the bulk of the capacity addition in the last financial year - 1,290 Mw, or 37 per cent of the total capacity installed during FY16 - thanks to the state's higher power tariff at Rs 5.96/kilowatt-hour (kwh). However, now that the tariff has been reduced to Rs 4.78/kwh, effective April 1, 2016, IWTA expects 400-500 Mw as an ongoing business.

Rajasthan, Gujarat and Andhra Pradesh also saw more instalment during FY16 compared to the previous year at 688 Mw (20 per cent of total capacity), 386 Mw (11 per cent) and 363 (10 per cent), respectively. Andhra Pradesh went through a lean patch, but things have improved after the change in government, according to Giri.

Maharashtra's policy and push for a tariff of Rs 5.81 (for zone-1) resulted in wind energy addition of 1,074 Mw in the state. For Tamil Nadu, the installation has not crossed 200 Mw a year since 2012-13, owing to various issues including the tariff-related matters and evacuation constrains. The state has 28 per cent of the total installed wind capacity in the country, which is 7,652 Mw of 26,916 Mw. It has added 197 Mw (5.7 per cent), which is the highest in the past four years.

However, Tamil Nadu recently revised its wind energy tariff upwards, from Rs 3.51/kwh to Rs 4.16/kwh, which is expected to boost investments into the sector. There is inconsistency in terms of tariff and policy across various states, which makes it difficult for the sector to grow according to the expectations, say experts. Preferential tariff norms across the key states are not consistent with the guiding principles/norms as stipulated by the Central Electricity Regulatory Commission, according to Icra.

First Published: Fri, May 06 2016. 00:00 IST