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India’s Wind-Power Target Is up in the Air

According to reports, India’s ambitious push to increase the share of renewable energy in its total power generation portfolio to nearly one-fifth by 2017 largely on the back of wind power could falter due to slow progress in implementing policies to attract investment to the sector, according to industry officials.

Wind energy accounts for around 70% of India’s renewable-energy generation, excluding large hydroelectric power projects. A government target of doubling renewable energy output to 55 gigawatts in the five years to March 2017 relies heavily on growth in the wind sector.

The government is targeting increased renewable capacity in part to avoid repeats of power outages that plunged large swaths of the nation into darkness last summer as a result of creaky grid infrastructure, exacerbated by coal shortages. At the same time, it is hoping to significantly cut its annual fuel import bill, which reached $142 billion in the year ended March 31.

Inconsistent policies on incentivizing the renewable sector have hurt India’s energy security goals, Gamesa  Wind Turbines Pvt. Chairman Ramesh Kymal told The Wall Street Journal. Gamesa Wind is the Indian unit of Spain’s Gamesa Corporación Tecnológica SA.

“Of course there will be more outages going forward if the government does not lend clear-cut support to the wind sector, he said. “Its own renewable energy and overall energy security goals are at stake.”

Last March, the government withdrew a renewable-power tariff-linked subsidy and cut a tax-incentive program. Although it announced in February that tariff-subsidy support for the wind sector would be reintroduced, it has yet to implement the decision. It is unclear whether the tax-incentive program will be revived.

Several companies have invested billions of dollars in the wind sector over the past few years and have drawn up plans to invest up to an additional $16 billion between 2012 and 2017, contingent on favorable government policies.

India has about 19 gigawatts of installed wind-power capacity compared with just 1.5 gigawatts of solar capacity. It is targeting an additional 15 gigawatts in the five years ending March 2017, which would take the total to more than 32 gigawatts and account for more than a 10th of India’s energy mix, according to calculations based on official data and projections.

Industry executives and analysts say the capacity addition goal will be missed by at least 5 gigawatts.

According to Mr. Kymal, who also heads the local wind turbine manufacturer’s association, the wind sector added about 1.7 gigawatts of wind-power capacity in 2012-13, and it is on track to add around the same capacity in 2013-14, missing the official target by around a third in both years.

Minister for New and Renewable Energy Farooq Abdullah said the wind-power sector can expect government backing.

“We have set for ourselves an ambitious target, and the government is committed to support the sector through a variety of incentives as well as a favorable policy and regulatory framework,” he said in an emailed response to a query from The Wall Street Journal. He didn’t say whether India has downgraded its target for wind-power capacity.

Still, a senior government official, who didn’t want to be identified, said the renewable ministry is worried that a lack of incentives will hamper wind-energy plans. The ministry plans to seek federal cabinet approval to revive the incentive program, but there is no timeline for when this may happen, he added.

India has to fix broader problems plaguing the power sector if it wants to provide a long-term boost to renewables, said Amit Sinha, a partner at Bain & Co. India, a consulting firm.

“It’s not only about the subsidies,” Mr. Sinha told The Wall Street Journal. “Subsidies are important. But problems such as fuel shortages [and the] financial health of electricity distribution companies have to be fixed first.”

The challenges facing wind power are numerous, Mr. Sinha noted, citing the volatility of wind generation—causing problems for grids, which need to maintain minimum base loads to remain stable—and the fact that reliable wind power is feasible in only some parts of the country.

Nearly 85% of India’s wind power is generated in just five of India’s 28 states: Tamil Nadu, Maharashtra, Gujarat, Karnataka and Rajasthan. Companies are eying newer sites in these states and exploring options in Andhra Pradesh, Kerala and Madhya Pradesh, Gamesa Wind’s Mr. Kymal said.

The lack of incentives for wind-farm operators to establish projects is hurting order books at turbine manufacturers, Mr. Kymal said.

Gamesa Wind has the capacity to manufacture a total of 1,500 megawatts of wind turbines a year, but it could only manage around 400 megawatts a year over the past two years and is aiming for 670 megawatts this year.

ReGen Powertech Pvt. Ltd. has been using only around half of its 693-megawatt capacity, and it has put expansion plans on hold, Managing Director Madhusudan Khemka told The Wall Street Journal.

Suzlon Energy Ltd., the world’s fifth-largest wind-turbine maker, hasn’t posted an annual profit in past three years, underscoring the sector’s problems.

“What is lost is lost,” Mr. Kymal said. “But faster decision making now on a pro-wind-sector policy will help all.”

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