Wind energy sector’s capacity addition will improve in near term, while the bid power tariffs in the recent wind power auctions inched upwards, an ICRA report said on Wednesday.
The wind energy sector has witnessed project awards of 10 GW between February 2017 and September 2018 by central nodal agencies like the Solar Energy Corporation of India Limited (SECI) and NTPC Limited (NTPC) as well as state distribution utilities, providing a visibility for substantial wind-based capacity addition in FY2019 and FY2020, the ICRA said in a statement Bid tariffs discovered in the recent wind power auctions increased slightly from the low of Rs. 2.43 per unit to Rs. 2.77 per unit discovered during August-September 2018, though continuing to remain less than Rs 3 per unit, according to an ICRA note.
On the flip side, though the wind energy bid tariff levels are still competitive vis-a-vis conventional energy sources, the viability of such tariffs depends upon the developer’s ability to identify locations with high generation potential, availability of long-tenure debt at cost competitive rates and capital cost, it said.
Commenting on this, Girishkumar Kadam, Sector Head and Vice President – Corporate Ratings, ICRA, said, “The project awards so far are expected to increase the capacity addition to about 2.5-3 GW in FY2019 from 1.7 GW in FY2018. As for the increase in bid tariffs, it is partly because of some increase in wind turbine equipment pricing, additional evacuation cost and rising cost of funding. “However, the ability of the nodal agencies to achieve the target wind project awards of 10 GW each in FY2019 and FY2020 remains a challenge, in view of the difficulties being faced by developers in securing connectivity and open access to inter-state transmission network.”
Further, there has been a recent order by the Maharashtra Electricity Regulatory Commission (MERC) for clearing the outstanding dues including the delayed payment charges in a time-bound manner.