New Delhi (Staff Correspondent): India’s annual capacity addition of wind power will more than double to 7.1 gigawatt (GW) on average in the next two fiscal, compared with 3.4 GW in fiscal 2023-25, driven by government measures to ramp up the pace. This will take the installed wind capacity up to ~63 GW by fiscal 2027.
The capacity additions over fiscals 2023-25 continued to remain tepid in the range of 6-7 GW on account of fewer successful auctions of wind capacities (5.9 GW in FY21-23 and 5.2 GW in FY23-25). These were largely due to lower interest from developers on account of low tariffs that dampened returns for developers along with issues in terms of availability of land and transmission infrastructure at sites with high wind potential.
However, tailwinds are emerging which will help double the pace of capacity additions over the next two fiscals. Government’s push towards the auctions of hybrid1 renewable projects (which are a combination of solar, wind and / or storage) as well as an emerging favourable cost regime for wind projects are expected to drive capacity additions.
In addition to the steady auction pace of standalone wind projects, auctions of hybrid renewable energy projects (which require the developers to supply renewable electricity during high-demand — evening and early morning — hours) have spurted. Around 30–50% of the capacities of such hybrid projects are expected to be wind power as these generate electricity during peak load times, unlike solar power, which generates mostly during daytime. Further, as these hybrid projects help distribution companies (discoms) solve the problem of scheduling power at critical times, we expect these projects to find favour in offtake and grow fast.
Ankit Hakhu, Director, Crisil Ratings Limited, said, “We have over 30 GW of hybrid projects in pipeline which are expected to be commissioned within next 2-4 years and would contribute to the expected step-up in wind capacity additions. Traction in signing power purchase agreements (PPAs) is also visible, with more than 60% of such projects auctioned till March 2024 having their PPAs signed by January 2025.”
Another factor that lends confidence to support implementation is a favourable movement in both tariffs and project costs. Prices of raw materials such as steel and cement, which form over two-thirds of the project cost, have been stable or have reduced from the highs seen in fiscals 2022 and 2023, while tariffs have moved to over Rs 3 per unit providing a reasonable internal rate of return of 10-15% for the developers to implement such capacities.
That said, certain issues require continuous monitoring and / or streamlining. These are availability of land and transmission infrastructure to connect high resource potential wind zones concentrated in Gujarat, Karnataka and Tamil Nadu.
Varun Marwaha, Associate Director, Crisil Ratings Limited said, “The government push to build over 100 GW of incremental transmission infrastructure for wind power by 2030 by developing green energy corridors under various schemes2 is gaining traction. By December 20243, the capacity of such infrastructure had reached ~65 GW, higher than the operational wind capacity in these corridors. However, a sizeable portion of the ~25 GW of transmission infrastructure in high-wind zones is under development and is scheduled to be ready next fiscal. There is a risk of delays as timely availability of critical transmission equipment, such as transformers, switchgears and high-voltage direct current components may be a challenge amidst high demand.”
