Importance and current status
This sector is highly important is in India’s energy future.
Wind accounts for 10% of India’s total power capacity of 320 GW; and 4% in terms of electricity produced.
India, with 32 GW, has the fourth biggest wind energy capacity in the world, after China, the U.S. and Germany.
The national target is 60 GW by 2022.
Record levels of new capacity installations
For the first time, wind power installations(windmills) crossed the 5 Gigawatt mark, to reach 5,400 MW in 2016-17. The earlier record was 3,472 MW of 2015-16. The current year might see installations of 6 GW.
Falling cost to the consumer
Additionally, the competition in the wind energy sector is also driving the cost to the consumer to a lower level. In February 2017, in the country’s first-ever auctions of wind power capacity, the price at which windmill owners would sell electricity to companies that supply power to consumers fell to a record low of Rs. 3.46 a kWhr. It happened because competitive forces were at play. Otherwise, wind power prices are fixed by the various state electricity regulatory commissions.
The growth of wind energy sector in India
The Indian wind industry has been operational since the late 1980s. For many years, it existed only in T.N., the windiest State. In the last decade, it spread to eight other States that have any wind potential — four other southern states, M.P., Maharashtra, Gujarat and Rajasthan.
However now, the Centre wants to buy electricity from wind power producers and sell it to electricity supply companies in other states, which are bound by law to buy a portion of their needs from wind and solar sources. The 1,000 MW capacity auction of February 2017 took place under such an arrangement, and there will be more.
Government of India playing trader truly expands the market for wind power companies.
The challenges ahead
Following the Centre’s example, all states want to determine prices through competitive bidding, and competition Will bring down prices. So, while the market expands, the prices also drop.
Besides, the government has let expire recently the ‘generation-based incentive’, a scheme which paid wind power companies 50 paise for every kWhr they produced, subject to certain caps. Also, the tax-saving ‘accelerated depreciation’ benefit, which supported the industry in the late ‘80s, is now halved.
As a result, many analysts are of the opinion that the government is withdrawing the support a little too soon especially given the fact that it is still a young sector.
Related information: National Offshore Wind Energy Policy
A major renewable energy policy initiative was taken in the year 2015 in the form of the National Offshore Wind Energy Policy 2015 to help in offshore wind energy development.
The policy has a major thrust on setting up of offshore wind power projects and research and development activities in waters, in or adjacent to the country, up to the seaward distance of 200 nautical miles exclusive economic zone (EEZ) of the country from the base line.