wind solar hybrid

Slump in wind sector: Falling capacity addition, rising tender under-subscription

The share of wind energy sector, in overall renewable portfolio of India, has lately seen a sharp fall. This is mainly attributed to sluggish growth of sector and rise in share of solar projects. As of July 31, 2019, the total wind capacity in India stands at 37 GW, contributing 45% share in total renewables’ portfolio. Compared to last year, this is a fall of more than ten percentage points.

Further analysis of wind capacity addition trends shows a Y-o-Y reduction of 17% from 1.8 GW in FY2018 to 1.5 GW in FY2019. This fall in capacity addition is attributed to the following factors:

  • Policies that favoured growth reaching end of term. Until Mar 31, 2018, Karnataka provided a 10-year exemption on wheeling charges and CSS for third party sale/ open access renewables projects.  Post withdrawal of waivers, the wind market has contracted in size from 905 MW in FY2018 to only 87 MW in FY2019.
  • Delay in the commissioning of projects tendered under SECI auctions held in 2017. The reasons for this delay are the lack of transmission and land availability. Also, there was reluctance by state authorities to lease land for wind projects auctioned by the central agencies.

Figure 1: Wind Installation trends in India, as of Jul 31, 2019

Source: MNRE, IWTMA, JMK Research

For similar reasons, the project developers are showing lack of interest even for new wind auctions. Last three auctions saw nearly 60% under-subscriptions. Out of 4 GW tendered capacity, bids for only 1.7 GW were received. Before these three auctions, there had never been a case of under subscription in wind tenders.

Figure 2: Wind capacity allotted through tenders, as of Aug 31, 2019, MW

Source: JMK Research

*Wind-solar hybrid tenders are not included

Over the years, wind energy has been a huge contributor to the renewable sector. The policies were also designed to facilitate its growth. However, end of term of these favourable policies along with lack of suitable sites and supporting infrastructure, are impacting growth of this sector. Though in the long run, with technological advancements in wind turbines, we can expect an increase in plant PLF and a possibility to harness wind energy even from low wind potential sites. The evolution of the wind-solar hybrid model could also create interesting dynamics and can be the key growth driver for the sector.