India’s primary energy demand is forecasted to more than double by 2035 due to strong economic growth. Electricity generation will account for much of the increase. India’s electricity production relies heavily on coal – its share is currently estimated to account for 70 per cent of total production. Heavy reliance on coal will increase CO2 emissions and cause a significant increase in coal imports in the future.
Renewable energy and wind in particular have great potential to provide a valuable alternate low carbon fuel source at competitive pricing. Including renewable energy in our energy mix will help us reduce emissions in an economically efficient and profitable manner.
India already has a target for renewable energy to account for 15 per cent of total electricity production by 2020. In the 12th Five- Year Plan around 85 GW of power capacity is to be added from all sources, out of which wind is to contribute around 11 GW. Over 26 per cent of the 12th Plan’s targeted capacity can be expected from wind, making it the second largest power source over the next five years.
The Indian wind market is the third largest in the world. In the past five years the growth of wind energy has been second only to coal; over 10 GW of wind capacity and 17.3 GW of new installations have been added. Last year alone, India added more than 3.2 GW of new wind capacity. Industry consensus is that India could grow at 4-5 GW on an annual basis, in the next five years.
The key factors driving growth in the wind industry are:
Demand: The primary driver of wind continues to be the unquenchable demand for power from a rapidly growing Indian economy. India’s peak deficit continues to hover around 12-13 per cent. Certain industrial states where wind can play a very crucial role have a peak electricity deficit of 20-25 per cent. A recent assessment of wind energy in India by Lawrence Berkeley National Laboratory has revised the wind potential significantly upwards, to about 20 to 30 times greater than the current government estimate of 102 GW. A large section of manufacturing businesses in India have already secured wind as a significant source of electricity.
Grid Parity: The scalability of wind at a competitive cost has made it a preferable source for adequate and reliable power, principally for industrial customers. The capex for setting up a wind turbine in India is amongst the most economical in the world. With fixed power purchase agreements, customers of wind power are also able to hedge their power costs for 13 years or more.
Lucrative Policies: The wind sector is commercially profitable with guaranteed returns. The policy and regulatory environment in India remains one of the best and most developed across the globe.
The Indian government understands the need to shift from fossil fuels to more sustainable sources and has therefore proactively encouraged renewable power including wind. Wind power provides flexible trading options and can be utilised in several different ways: it can be sold to utilities for securing feed in tariffs, utilised for captive purpose, or sold to open access customers.
With the recent introduction of Renewable Energy Certificates, and the likely continuation of Generation Based Incentives, the wind investor base has widened to include large independent power producers.
Indian Business Model: The end-to-end business model pioneered by Suzlon is another driver for wind. The business model offers the full scale of services including expertise in wind measurement, turbine design, manufacturing, and maintenance.
It guarantees availability of machines for at least 20 years and will continue to drive the future growth of wind. India is also moving towards the 2 MW+ turbines from the submegawatt turbines, to harness its wind potential and enable faster scaling-up.
Key Enablers: The scaling up of wind potential from 17.3 GW in 2012 to around 40 GW in 2017 would require the elimination of supply side bottlenecks. To increase wind penetration in the generation mix would require investments in improving transmissions as well as grid capacities.
Other areas for improvement include hassle-free clearance of wind sites and access to better roads that enable transportation of larger machines. The central government and several state governments are proactively working to eliminate these bottlenecks and we hope that supply side factors will not limit the country’s huge wind potential.
In summary, wind certainly has the potential to be a key enabler of the broader national objective of the 12th Five-Year Plan to achieve faster, sustainable and more inclusive growth. Wind not only provides a sustainable source of energy but has also proven to be a source of multidimensional, socioeconomic progress.
In India, for example, wind has thus far abated 140 million tons of carbon emissions, saved over 70 million tons of coal imports and generated 3,00,000 job years.
Since wind sites are mostly concentrated in remote areas, expansion of this sector has been transforming the lives in rural India.
Wind power’s expansion in India during the 12th Plan will uniquely place it as a key driver in achieving faster, more sustainable and inclusive growth.
Capacity addition in renewable energy
The Ministry of New and Renewable Energy has proposed specific targets of 29,800 MW comprising 15,000 MW of wind power, 2,100 MW of small hydropower, 10,000 MW of solar power and 2,700 MW of bio-power for capacity addition of grid-interactive renewable power in the 12th Five-Year Plan.
The Ministry of New and Renewable Energy is yet to fix state-wise targets for RE capacity addition during the 12th Five-Year Plan period.