The overall wind energy based capacity installations on an all India basis have grown at a CAGR of 26% over the last ten year period. The share of wind energy based capacity within the overall installed capacity has increased to about 9% as on Mar. 31, 2013 from 2% as on Mar. 31, 2003 and accounts for about 68% of overall renewable energy capacity.
In line with the requirements of Electricity Act-2003, Central Electricity Regulatory Commission (CERC) came out with generic tariff norms for the wind energy sector in September 2009 and also, State Electricity Regulatory Commissions (SERCs) in all the key states (with wind energy potential) have issued preferential tariff regulations.
Also, SERCs in all the states have issued the regulations for Renewable Purchase Obligation (RPO) i.e. a certain proportion of total consumption in the distribution licensee area to be purchased from the renewable energy source.
Moreover, an enabling framework of Renewable Energy Certificate (REC) so as to ensure renewable purchase obligation (RPO) compliance was introduced in January 2010 by CERC and subsequently, the required REC regulations have been issued by SERCs across almost all the states.
”Fundamental long term demand outlook for wind energy is expected to remain strong, supported by large wind energy requirements to meet the RPO requirements in the country,” said ICRA Research.
Also, wind power projects remain favourably placed with relatively low construction period in comparison to the conventional thermal based projects, which are exposed to significant execution related risks due to long delays in land acquisition and statutory clearances.
While demand from investors seeking tax benefit has decreased with accelerated depreciation benefit being withdrawn from Apr. 1, 2012, several IPPs have put in place firm plans for large-sized wind energy projects with the trend towards higher average size per project (ranging above 50 MW) at a single location. Going forward, investment demand from IPP segment would remain key growth driver.
ICRA expects the share of IPP segment in the capacity addition to increase further to about 60-70% over the next two to three years.
With continued delays in payments by state utility in Tamil Nadu, fresh investments in the state have been showing a declining trend, as reflected in a sharp decrease in the wind energy installations in the state during FY 2012-13.
”Increase in wind capacity additions in the near to medium term in Tamil Nadu is dependent upon improvement in the financial position of TANGEDCO and more importantly, regularization of the payment pattern by TANGEDCO,” ICRA said.