India - Outlook good after market restructure

INDIA: India installed 1.73GW of new onshore wind capacity in 2013, well down on 2012's figure of 2.44GW and 2011's 2.82GW.

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The main reason for the fall was the withdrawal in March 2012 of two key federal policy incentives - accelerated depreciation (AD) and generation-based incentive (GBI). The government's failure to impose renewable portfolio obligations on utilities has also had a negative effect.

However, 2013 was also a year of increased competition, industry consolidation and significant policy directives that indicate a good outlook for 2014. For the first time, two Chinese manufacturers, Sinovel and Ming Yang, won approval to sell their turbines in India.

There was significant market restructuring, in which many large players, such as DLF, TVS Energy and AES exited the wind business while new players like Mahindra Group and L&T announced plans to enter the sector. Importantly, independent power producers like Continuum Energy, Green Infra Limited, Bharat Light & Power and Tata Power consolidated their wind business by acquiring new assets and companies.

On the policy front, the Ministry of New and Renewable Energy announced the restoration of GBI benefit in September 2013, allowing generators to claim it retrospectively from 1 April 2012.

Offshore policy

In a separate development, the ministry also released the draft national offshore wind policy in May 2013 for soliciting stakeholder inputs. Late last year, it also indicated that it was working on developing a National Wind Energy Mission (along the lines of the highly successful National Solar Mission) to formulate a consolidated policy and regulatory support system for promoting wind energy in India.

Current political backdrop National assembly elections in May are expected to bring in a new right-wing coalition government. But wind is still recovering from the withdrawal of policy incentives in 2012

High point of 2013 Morgan Stanley-backed Continuum Wind energy acquired 180MW of operational wind assets from Sravanthi Group for an undisclosed sum

Low point Nearly 800MW of wind power was backed down because of transmission constraints by the utility in the state of Tamil Nadu

Key influencer Narendra Modi, widely tipped to become India's next prime minister, is expected to have a strong influence in all policy decisions by the federal government, and may not be positive about policy support for wind

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