The upcoming budget needs to bring in some significant policy changes to ensure that RE targets are met, particularly in the sector of wind power
At the beginning of the fiscal 2023-24, the questions uppermost in everyone’s mind are – have we met the targets and if not, then do we need to tweak the policy mechanisms? Statistics tells us that we are well below the target of 175 GW that was to be acahieved by the end of 2022. At the end of December 2022, nearly 42 GW of wind power and 63 GW of solar power had been installed. If small hydro and biomass are considered, the total installed capacity of Renewable Energies turns out to be 120 GW, still substantially below the 175 GW target. In 2022 (April-Dec) around 1.6 GW of wind power and 9 GW solar capacity has been achieved.
While a substantial capacity has been set up – all is not well! The reverse auction mechanism that has been questioned frequently within the industy over the last few years, is associated with many lacunae. Apart from slowing down the growth in RE capacity additions, it also resulted in many states facing null investments or very little development in wind capacity (such as Wind Power in MP, Rajasthan and Maharashtra) and on the other hand there has been a rush of investments in a few states. At the same time, reverse auctions caused stress in most of the IPPs. A regulatory institutional system that had evolved almost over two decades and was well geared in capacity and capability to support regulatory requirements of FiT mechanisms lay waste with the shift.
Now after five years, the government has scrapped the reversed auction process for wind power in India. It is worth noting that the process that resulted in 85% of the wind power capacity addition in the country was not an auction process at all but the Feed-in-Tariff (FiT) mechanism. In policy, it is important to understand that a process such as FiT that is demonstrated as successful on a national scale, should not have been tempered with. Therefore, the FiT mechanism shouldn't have been completely scrapped in the first place (at least for wind). A reverse auction once or twice for price discovery would have been worthwhile and would have enabled better tariff setting under the FiT mechanism. The same should hold for solar as well.
Now that the reverse auction process has been tried out and everyone is aware of the shortcomings of this approach, it will be a good idea to reinstate the FiT mechanism. This will also result in a much more geographically dispersed and major development taking place in MP, Rajasthan, Kerala, Maharashtra, and parts of Odisha, AP and Telangana.
Yet another front that needs government’s attention is Research and Development. So far R&D has remained namesake. It is worthwhile to mentione here that China has now developed a 18 MW wind turbine, the largest in the world but we face major difficulties in scaling up from 2 MW wind turbines. There are many benefits associated with large wind turbines. First and foremost, they generate more power at a given point of land and are widely spaced, reducing overall land covered by wind turbines. Secondly, large wind turbines achieve higher plant load factor, which is beneficial to the grid managers. A recommendation to the government is to support R&D of large wind turbines, which will also go well with Offshore and Hydrogen initiatives and will open up export opportunities in a big way.
State level issues and resistance of Discoms to higher tariffs and their financial health are yet other elements that need to be looked into to allow holistic development of the sector.
In summary, we would recommend returning to FiT, as much as possible, resolving State level issues, Discom resistance to FiT and a special focus on extra large wind turbines.
(The author is the Vice President of World Wind Energy Association)