India’s wind power growth is well behind schedule amid a 67% collapse in tendering levels, said financial ratings agency Icra as it downgraded its outlook for the sector to negative in another blow to prospects for meeting 2022 government targets.
Icra said it expects 2.5GW of new capacity to be added in India by the end of the current 2020 financial year on 31 March. That’s slightly up on the 1.6GW installed in FY2019 thanks to India’s massive project backlog, but well down on the level needed to hit the country’s 60GW 2022 goal, which Icra said “remains a challenge” given the 37GW total in place by late last year.
Revising its wind sector outlook down from stable to negative, Icra, a unit of global ratings giant Moody’s, said the amount tendered by India’s central government, states and corporates plunged 67% to 2.3GW in the 2019 calendar year from 6.9GW in 2018, with many auctions undersubscribed.
Sector head Girishkumar Kadam said the schedule set by the various tendering bodies foresaw 5GW commissioned last year, against an actual level of 2GW.
“The actual execution on ground has been hampered by delays in completion of land acquisition, securing transmission connectivity for inter-state projects, financing challenges due to concerns over bid tariff viability and delays in approval for tariff adoption from the regulators,” Kadam said.
Tariffs that are awarded have remained below the 3 rupees/kWh level ($0.042/kWh), testing the viability of project finances, Icra said.
Research by the ratings agency suggests the best sites and turbines with a plant load factor (PLF) above 35% are crucial to project viability at such levels.
Icra said: “Our study of a sample set of projects commissioned over the past one to two years indicates that there are projects, which have been able to achieve annual PLF in the range of 33-38%, thus providing a comfort on PLF assumption which is critical for the viability of projects bid at tariffs lower than three rupees per unit.
“Such projects typically have higher hub height and rotor diameter of more than 100 meters and are concentrated at windy locations in the states of Gujarat and Tamil Nadu. However, the sustainability of such performance over the long tenure also remains critical.”
Icra had already revised down its rating on a 1.9GW portfolio of operating wind and solar projects.
The 60GW wind power goal and a parallel 100GW solar target has been a cornerstone policy of Prime Minister Narendra Modi’s government, with officials reacting sharply to rebuff the growing range of commentators suggesting they won’t be met.
The Ministry of New and Renewable Energy last year slammed as “ill founded” similar conclusions by CRISIL, another Indian ratings agency.