It is too early to call a winner in the battle between solar and wind power versus dirty coal. For that matter, there might never be one, even after taking into account a lot of hot air about the odds of wind and solar power replacing thermal, hydro and coal.
Conventional energy sources are as yet de rigueur to produce the humongous quantities of power which energy hungry nations like India need. But the battlelines for wind power growth have been etched into place for quite a while in the form of investments in manufacturing assets by a phalanx of multinational wind power titans. The second wave of wind power manufacturing and implementation companies entering the Indian market is just starting even as India has beaten its capacity addition targets for 2016 by a mile and more.
Vestas, one of the earliest entrants to the Indian market, started operations in 1989 and was among the top three Indian players. The Danish firm sold about 3 GW (Gigawatt) of machines but quit India in 2012. It returned in 2014, announcing contracts worth 86 MW (Megawatt) in 2016, and is setting up a carbon fibre manufacturing plant in Gujarat at investments of 50 million Euro.
Brazil's WEG is keen on pushing wind power projects in Gujarat and Andhra Pradesh, while Copenhagen-based Vestas is consolidating its gains in Tamil Nadu and pushing further into the eastern and southern Indian markets. Tulsi Tanti's Suzlon has long achieved cult status for holding a tidy fort against headwinds from the MNC wind energy giants.
Acciona Wind Power, an original equipment manufacturer (OEM) which specialises in turnkey project deliveries in the wind energy space, is actively targeting new energy projects in Tamil Nadu and Gujarat. The Spanish turbine maker had late last month, signed power purchase agreements with the Karnataka government to operate two of its wind parks in the state.
The growing attraction of world wind energy majors towards the Indian market has been spurred by policy initiatives of successive governments in the wind energy sector that includes introduction of bidding, repowering policy, the draft Wind-Solar Hybrid Policy and revised guidelines for development of wind power projects issued in 2014. The delightful result here is that wind generated power now accounts for 28.70 GW or 57.4 per cent of installed renewable energy capacity in India, followed by solar power with 9.01 GW, small hydro power with 4.33 GW and biomass power accounting for 7.85 GW.
Blowing hot, blowing cold
The enthusiasm is infectious, and private producers are blithe about record low prices for renewable energy and strong growth prospects in the Indian wind power market. But with a high-subsidy situation for renewable energy industries dealing with the sun and the wind, prices which turn out lower than dirty, though dependable coal, or other fossil fuels are simply to be expected.
When it comes to future growth, the 175-GW target for renewable energy capacity (including 60 GW of cumulative wind power capacity) announced by India at the Paris Climate Summit looks aggressive; and rather steep -- an addition of 12 GW of wind power capacity annually. Such a target masks the gestation period required for new energy sources like wind to acquire a major share of energy supply. It took coal, oil and gas 60 years to get to be the world's major share of energy supply. Carbon free renewables are at the 5 per cent stage today.
The financing issue is also particularly problematic, as the estimated $170 billion in investment is, in all likelihood, beyond the capacity of the domestic financial sector even with subsidies, writes renewable energy expert Atanu Mukherjee, president of M N Dastur & Co, in a leading national daily. Attracting international capital competing for similar energy technologies worldwide introduces new challenges, Mukherjee notes.
He agrees that government subsidies and programmes help seed the market for wind and solar power programs, but such initiatives would require very large land banks in order to support competitive tariffs.
The implementation of a National Clean Energy Fund which reimburses 40 percent of a wind power project's costs through the Chennai-based Centre for Wind Energy Technology (C-WET) has been a strong opener for multinationals and private developers undertaking wind potential assessment in Indian locations.
A few well aimed subsidies helped the Ministry of New and Renewable Energy (MNRE) set another record in wind power capacity addition by adding over 5,400 MW in 2016-17 against the target of 4,000 MW. This year's achievement surpassed the previous higher capacity addition of 3,423 MW. In India, which is the biggest greenhouse gas emitter after the US and China, renewable energy currently accounts for about 16 percent of total installed capacity of 315,426 MW.
Between May 2016 and the end of April 2017, India added a record 5 GW of new wind capacity. According to Windpower Intelligence, capacity exceeded 29.6 GW at the end of June.
Over the past decade, the expansion of European and Chinese wind energy OEMs in India has been fuelled by the government's ambitious renewable energy targets and the possibility of moving away from the turnkey model of project delivery. "By now, we are slightly more optimistic," Nordex CEO Jose Luis Blanco said in a speech last month, after India's shift to a tender-based model for wind projects caused irritation among investors. But Nordex knows the pitfalls of the game.
While over 55 percent of the installed renewable power capacity of 50,018 MW across the country comprises wind power, at least 40 percent of this is understood to be not grid interactive.
There have been cases where states refused to pay up for wind or solar power pushed onto their grids by private producers, leading to projects being either stranded or called off totally. Private solar and wind power producers in Karnataka have had their share of nightmares with distribution companies who refuse to pay up on time.
There is the lack of a quick and prompt payments mechanism in a distribution system riddled with leakages and corruption at every step, besides private wind power producers still relying on irregular and short-term subsidies.
Wind power is a clear source of vital energy provided India masters the game of integrating it successfully into its largescale power networks. Improving grid interactivity for the wind power industry through a wider range of short-term subsidies and incentives for private players is the way the wind will blow.
Moreover, India's electricity grid has lagged far behind the construction of wind farms. Expanding the grid continues to be a logistical challenge which the Modi government faces in states like Uttar Pradesh and the North East. Once grids are online, the amount of electricity being leaked out of transmission lines pose further problems for monetising wind energy. Huge arrays were built only to have to wait for ages to be plugged into the grid. Even once connected, much electricity leaks out of transmission lines. And the grid often proves unable to cope with surges in electricity as the wind blows.
Getting it onto the wire
India has apparently worked hard to resolve many of these problems. For instance, new wind farms now get connected faster. Yet, despite improvements, the grid still struggles to cope with fluctuating loads and variations in wind and solar energy. These, coupled with the lack of adequate electricity storage facilities, result in about 15-20 per cent of all renewable energy generated in India being wasted, according to private producers.
The typical strategy has been to simply discard the unstable power without it ever entering the grid. Better storage technologies are coming in, and energy companies are coming to grips with the problem by considering lithium ion batteries as storage options to ensure uniform output -- which is "grid-ready".
While companies gear up their R&D warchests to ensure that wind farms run to full capacity, they will also have to improve the quality of their turbines and ensure that maintenance of newer machines does not fall short. A lot of poor servicing in India leads to wind farms operating below capacity. Upcoming investments focussed on addressing these issues will help IREDA better address India's capacity targets.
While supplementing a high baseload of dirty, but dependable coal, viability gap funding will be key to ensuring that the operational challenges of storage and stable supply of electricity across wind types are met. The industry has called for more tax incentives for storage technology manufacturing. But the biggest question which will plague government and producers alike will be how large a share of power supply will continue to be generated from a fluctuating source like wind.
India will need a highly connected national wind grid which backs up areas experiencing weaker wind patterns with the right power generation balance. This could become a model for green energy use elsewhere, and is achievable, despite the government's 175 GW target for renewable energy capacity by 2022 looking less so.