Wind developers at risk
India’s wind-energy industry is seeing the viability of projects called into question as it adjusts to Prime Minister Narendra Modi’s transition away from two separate systems to pay for clean power.
The government is shifting toward auctions to buy electricity from wind, phasing out feed-in tariffs that guarantee a fixed price to producers for their power. Utilities that pay for the power are pushing developers who qualify for the fixed payments to match the lower costs auctions are achieving.
The result is threatening the economic viability of work by developers including ReGen Powertech Pvt. Ltd and turbine manufacturers led by Inox Wind Ltd, Gamesa Corp., Tecnologica SA and Suzlon Energy Ltd. They say that more projects will fall into disarray without a uniform policy setting out how the industry gets paid.
“Half fixed tariffs, half bidding doesn’t work and we’re telling the government to come up with a policy fast, don’t delay it anymore,” Ramesh Kymal, the chief executive officer in India for Zamudio, Spain-based Gamesa, said in an interview.
India is among a growing list of countries stretching from Asia to Europe that have used auctions to make clean energy more affordable. Those contests, in which developers seek to offer the lowest price possible to deliver clean electricity, have helped Modi’s government advance on its ambition to install 175 gigawatts (GW) of renewables by 2022 and spurred debate about whether wind and solar can replace coal as India’s dominant source of energy.
Until recently, states in India have bought wind energy through feed-in tariffs offering long-term contracts to power producers. The country’s first wind auction last month, which saw prices fall below the fixed rates, have left those states eager to match the lower costs achieved in the auctions and reluctant to stick with deals done under the old system.
Gujarat, a windy state in India’s west and also Modi’s home state, has refused to sign power purchase agreements for 230 megawatts (MW) of capacity and is now asking project developers to match auction rates, according to D.V. Giri, secretary general of the Indian Wind Turbine Manufacturers Association.