The IEA predicts that by 2020, 327 GW of power generation capacity will be needed, which would imply the addition of 16 GW per year. This urgent need is reflected in the target the Indian government has set in its 11th Five Year Plan (2007-2012), which envisages an addition of 78.7 GW in this period, 50.5 GW of which is coal, and 10.5 GW new wind energy generation capacity, plus 3.5 GW other renewables.
The Indian Ministry of New and Renewable Energy (MNRE) estimates that there is a potential of around 90 GW for power generation from different renewable energy sources in the country, including 48.5 GW of wind power, 14.3 GW of small hydro power and 26.4 GW of biomass.
The current figures are based on measurements from only nine states, and which were taken at low hub heights, in line with old technology. A more recent wind atlas published by the Center for Wind Technology (CWET) in April 2010 estimated the resource potential at 49,130 MW. This was based on an assumed land availability of 2% and 9 MW of installable wind power capacity per square kilometre.
It seems likely that the wind power potential is considerably underestimated. The Indian Wind Turbine Manufacturers Association (IWTMA) estimates that at hub heights of 55–65 metres, potential for wind development in India is around 65–70 GW.
The World Institute for Sustainable Energy, India (WISE) considers that with larger wind turbines, greater land availability and expanded resource exploration, the potential could be as great as 100 GW.
At the end of 2009, India had 10,926 MW of installed wind farm capacity, and 11,807 MW were reached by the end of the country’s financial year on 31 March 2010. However, wind power in India is concentrated in a few regions, especially the southern state of Tamil Nadu, which maintains its position as the state with the largest wind power installation.
It had 4.6 GW installed on 31 March 2010, representing close to 40% of India’s total wind farm capacity. This is beginning to change as other states, including Maharashtra, Gujarat, Rajasthan, Karnataka, West Bengal, Madhya Pradesh and Andhra Pradesh start to catch up, partly driven by new policy measures.
India ratified the Kyoto Protocol in August 2002, and the possibility to register projects under the Clean Development Mechanism (CDM) provided a further incentive to wind energy development.
By 1 September 2010, 416 Indian wind farm projects were in the CDM pipeline, accounting for 6,839 MW, second only to China. India’s wind energy potential has only been partially realised due to the lack of a coherent national renewable energy policy.
Currently, the promotion of renewable energy in India is mainly driven by state governments. While some states have set high renewable portfolio standards, other states only have low or no targets, and enforcement is insufficient. Furthermore, while in theory, RPS and feed-in-tariffs can coexist, this needs to be well managed to avoid inefficiencies.
The lack of a national policy is hampering genuine progress. Until very recently, the promotion of renewable power generation at a national level relied on one clause of the 2003 Electricity Act. This act restructured the Indian electricity industry by unbundling the vertically integrated electricity supply utilities in the Indian States and establishing Gujarat wind farm, Kutch, India State Regulatory Commissions (SERC s) in charge of setting electricity tariffs.
It also required the SERC s to set Renewable Portfolio Standards for electricity production in their state, and the Ministry for New and Renewable Energy (MNRE) issued guidelines to all state governments to create an attractive environment for the export, purchase, wheeling and banking of electricity generated by wind power projects.
Some of the government’s broad national policy guidelines include fiscal and financial incentives, wheeling, banking and third party sales, buy-back facility by states, land policies favouring wind farm development, financial assistance, and wind resource assessment.
In December 2009, India’s Ministry of New and Renewable Energy (MNRE) announced a national generation-based incentive (GBI) scheme for grid connected wind power projects, for the cumulative capacity of 4,000 MW to be commissioned by March 2012.
The GBI scheme provides an incentive of 0.5 Rupees per KWh (0.8 Euro cents) in addition to the existing state feed-in tariff. Investors who because of their small size or lack of tax liability cannot benefit from accelerated depreciation under the Income Tax Act can opt for this alternative incentive instead, up to 31 March 2012 or before the introduction of a new Direct Tax Code, whichever is earlier.
After this date, the Accelerated Depreciation may be phased out. This should facilitate the entry of large Independent Power Producers (IPPs) into the wind market, attract foreign direct investment and level the playing field between different types of investors. In addition, since this incentive is based on actual electricity production, rather than installation, it stimulates higher efficiencies.
India has a solid domestic manufacturing base, with current production capacity of 4,500-5,000 MW/year. Wind turbines manufacturers operating in India include Indian company Suzlon, which is now a global leader. 17 companies now manufacture wind turbines in India and another eight are in the process of entering the Indian wind energy market, through either joint venture under licensed production, as subsidiaries of foreign companies or as Indian companies with their own technology.
Thanks to new market entrants, it is expected that the annual production capacity will rise to 10,000+ MW by 2012-2013, according to WISE.
Some of these foreign companies now source more than 80% of the components for their Indian-manufactured wind turbines from India. Wind turbines and turbine blades have been exported from India to the USA, Europe, Australia, China and Brazil.
However, for India to reach its potential and to boost the necessary investment in renewable energy, it will be essential to introduce clear, stable and long-term support policies, carefully designed to ensure that they operate in harmony with existing state level mechanisms and do not reduce their effectiveness.
The GWEO scenarios For India
Under the IEA’s Reference scenario, India’s wind power market would shrink considerably from the current annual additions of around 1,300 MW to only 600 MW per year by 2030. The result would be a total installed capacity of 24 GW by 2020 and 30.5 GW by 2030.
Wind power would then produce close to 60 T Wh every year by 2020 and 75 TWh by 2030, and save 35 million tons of CO2 in 2020 and 45 million tons in 2030. Investments in wind power in India would also drop from the current levels of €1.7 billion per year to only €730 million by 2030.
Under the GWEO scenarios, we expect that by the end of 2010, between 12,600 MW and 12,800 MW will be installed in India. Under the Moderate scenario, the total installed wind farm capacity would reach almost 25 GW by 2015, and this would go on to grow to 46 GW by 2020 and 108 GW by 2030.
In this scenario, €3.7 billion would be invested in Indian wind energy development every year by 2020, representing a quadrupling of 2009 investment figures. Employment in the sector would grow from the currently estimated 21,400 jobs to over 84,000 by 2020 and 113,000 ten years later.
Yet the GWEO Advanced scenario shows that the wind energy development in India could go much further: By 2020 India could have almost 75 GW of wind power in operation, supplying 183 TWh of electricity each year, while employing almost 150,000 people in the sector and saving almost 173.5 million tonnes of CO2 emissions each year.
Investment would by then have reached a level of €7 billion per year. As mentioned above, the IEA Reference scenario predicts that by 2020, a total of 327 GW of power generation capacity will be needed in India, which would imply an addition of 16 GW per year.
As the Advanced scenario shows, wind power could be providing a significant proportion of this by 2020. With that level of momentum established in India’s wind energy sector, the ten years between 2020 and 2030 would then see spectacular growth, more than doubling the installed capacity for wind power and taking it to over 160 GW under the Advanced scenario.
This would go even further towards meeting India’s growing need for electric power. By 2030 wind power would be generating almost 400,000 GWh per year and be avoiding the emission of 373 million tonnes of CO2 each year.