New law drives return to market growth -- India on fast forward

Google Translate

In a fast transforming scenario of reforms under the Electricity Act 2003, India's power industry is witnessing the unbundling of electricity boards, with ownership changes and the establishment of regulatory commissions at the state and central level. With vows to significantly increase wind development being fulfilled through improvements to policy within the restructuring process, the future has rarely looked brighter. India has a target for 5000 MW of wind power by 2012. Danish market analyst company BTM Consult forecasts that 2800 MW of this will be installed by 2006. It could be sooner. Last year, around 250 MW went up, compared with 195 MW in 2002.

By the end of 2003, India's combined wind power generation had reached 2120 MW. Progress in meeting the target for 1500 MW of wind plant to be installed under India's 10th Five Year Plan (2002-2007) is well advanced, says the Ministry of Non-Conventional Energy Sources (MNES). In the next month alone, it expects to see another 100 MW running.

Significant local manufacturing capacity has been established and wind turbines and components are being exported to the US, Europe and several developing countries. NEG Micon, NEPC India, LM Glasfiber, Enercon, GE Wind and Suzlon are leading the pack. NEPC can now turn out 800, 225 kW turbines a year. The company's Raj Kumar says there has been a notable market boom from 2002 to 2003. His company recently won an order for 70 turbines from Vishal Exports in Ahmedabad, to be installed in the Tirunelveli belt of Tamil Nadu by September.

State governments are showing renewed interest in wind. Gujarat, with a 1450 MW of potential, is back with a blast. Around 50 sites in the state have been earmarked for wind farm development -- with 800-1600 MW likely to be installed in the coming years. The Gujarat government has signed agreements with Suzlon, NEG Micon, Enercon and NEPC India to develop wind farms on a build-own-transfer basis. Each manufacturer will be given land for the installation of between 200-400 MW in the Kutch, Jamnagar, Rajkot and Bhavnagar districts, although the details are yet to be confirmed.

Wind resource mapping and promotion of development opportunities to private sector corporations, public sector units and power utilities, is being given new priority. A centre for wind energy technology has been established in Chennai and one of its first tasks is to conduct a wind resource study of north-east India, an area of strong winds which to date has been largely ignored due to its difficult terrain.

The financial community's interest in wind also seems to have been rejuvenated. Banks are charging lower interest rates and the Indian Renewable Energy Development Agency (IREDA) has revised its financing terms for the wind sector -- interest rates have been lowered to 9.5%-11.5%, depending on the nature of investment, while repayment periods vary from seven to ten years. The climate is far more favourable than in recent years, although many in the industry still argue rates are too high.


Significantly, new comers are arriving as project developers. The Hinduja Group, a large industrial corporation, says it will make its wind department one of its core operations. Its foray into wind is via Alfin Wind Energy, a wholly-owned subsidiary of Ashok Leyland Finance (ALF), which operates 67 turbines with a combined capacity of 18 MW at two wind farms in southern Tamil Nadu. "Our aim is to become a major player in the wind industry, as a developer, operation and maintenance service provider and even a manufacturer of wind turbines," says the company's S. Nagarajan. Under current plans, ALF intends to invest $23 million in the wind sector, much of it in the development of a new 20 MW wind farm.

There is still room for improvement in national policy. Clarification of a mandatory minimum percentage of green electricity requirement for utilities under the Electricity Act is still awaited. And some states, particularly Kerala with a miserly 3 MW out of a potential for 600-800 MW, need properly designed regulations, says Anil Kane of the Indian Wind Energy Association.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in