Tangedco feels that a few wind turbine manufacturers have “formed a cartel” , driving up capital costs of setting up wind power projects in India.
Speaking at a stakeholder hearing on determination of tariff and allied issues related to power generation from Non Conventional Energy Sources conducted by Tamil Nadu Electricity Regulatory Commission (TNERC), Mr. G Rajagopal, Director-Finance,Tangedco said, “There are 4-5 wind manufacturers who have formed a cartel and setting the prices in India”. He further observed that such cartelization was driving up the capital costs of the projects and that cost of the wind turbine should be taken at about 4.5 Crore/MW.(Industry sources however noted that the capital costs have increased due to rise in raw material and other input costs, apart from longer blades and taller hub heights, resulting in bigger structures.)
He added, that Tangedco welcomed international competitive bidding for procuring wind energy,noting that this would enable newer international players to enter the country and offer the best prices to the distribution company.
Further industry sources that Panchabuta spoke to have said that global Chinese manufacturers wanting to enter India would welcome Tangedco’s move and might be willing to offer solutions for multi megawatt wind farms at about 5 Crore/MW.
The wind community was well represented with members from the captive users,Tamil Nadu Spinning Mills Association, Indian Wind Energy Association, Indian Wind Turbine Manufacturers Association and others.
The users and associations made their case for the continuation of the existing preferential tariff structure. They also recommended that the commission consider the capital cost for tariff calculation be taken between 6.5-7Crore/MW.Further, most of the associations made the case for fixing the wind power tariff from between Rs 5.32 – 6.40/ unit. The users, developers and the associations observed that the industry was not yet ready for competitive bidding in wind energy procurement.
However, making a strong case against the above issues, Tangedco officials when responding, noted in their representation to the commission that the capital cost for wind power should be in the range of Rs. 4.5 crore/MW, tariff should not be increased and wanted international competitive bidding.
These views of Tangedco was supported by consumers who presented to the commission.
Panchabuta’s view is that the industry might not be ready just yet for competitive bidding. If at all, there should be one pilot project undertaken under the Case II bidding mechanism and the learnings from the same incorporated into future plans to develop a bidding mechanism.
What was surprising to note was the lack of support for green energy from a number of consumers present in the meeting. It is pertinent to note that the tariffs for domestic consumers in the state has been raised recently after a very long hiatus.
However, we believe that more efforts need to be done by the numerous wind associations in educating the consumers on the benefits of clean energy. Initiatives must be undertaken by the various stakeholders in the industry to educate the public and create awareness on the tremendous impact that the industry has had on rural job generation and socio-economic development in villages where wind farms have been commissioned over the last decade.