The agency also said capacity addition is likely to grow slowly over the next five years, driven by the allotment of central transmission utility’s grid-connected capacities
New Delhi: India is likely to witness fresh investments worth Rs 1.1 lakh crore flowing into wind energy projects of 14-16 gigawatt (GW) capacity over five years through 2023.
“Capacity additions will primarily be driven by central government (SECI) allocations with relatively stronger counterparties like Solar Energy Corporation of India (SECI) and PTC, reducing risk as compared to direct exposure to state discoms,” research and ratings agency CRISIL said on Wednesday.
It added that state auctioning, on the other hand, has slowed as several states have signed power supply agreements (PSAs) with PTC and SECI to procure wind power under the schemes auctioned by them, to help fulfil their non-solar renewable purchase obligations (RPO) targets.
The agency also said capacity addition is likely to grow slowly over the next five years, driven by the allotment of central transmission utility’s grid-connected capacities. The shift to a competitive bidding mechanism has slowed industry growth due to a significant fall in tariffs, triggering a decline in both bid response and profitability for original equipment manufacturers (OEMs), it said.
“A shift to a competitive bidding mechanism in the wind energy sector has caused a slowdown in capacity addition as participants are yet to adjust, with tariffs having fallen to Rs 2.4-2.6 per unit, from Rs 4.0-4.5 per unit under the feed-in-tariff regime. Such low realisations remain unviable for the entire value chain at current capital costs of Rs 6.8-7.2 crore per MW,” CRISIL said.
The current financial year (2018-19) is also expected to continue to see a slowdown in capacity additions as, despite tendering and auctioning occurring in spurts through the fiscal, most of the capacity is expected to come online only between end-fiscal 2019 and fiscal 2021. Capacity pipelines are, therefore, bunched over these years with a weak outlook thereafter due to incremental challenges to execution.
CRISIL identified sustainability at low tariffs, poor bid response and slow tendering, inadequate transmission infrastructure and availability of low-cost funds for projects as the major constraints for growth of wind energy capacity addition.
Source: energy.economictimes.indiatimes
