India’s commitment to energy transition relies on the pivotal role of the wind power sector. To this end, the country is expanding its focus from onshore to offshore wind projects. The country aims to achieve an ambitious wind target of 140 GW by 2030. In 2023, it made notable progress by adding nearly 2.8 GW of new wind capacity, raising the total installed wind capacity to approximately 47 GW by July 2024.
This article is based on the insights shared by senior industry executives at Renewable Watch’s 12th edition of the “Wind Power in India” conference, analysing the sector’s challenges and opportunities in achieving the wind capacity addition goals. It further examines the specific challenges facing both the onshore and offshore wind segments and evaluates the potential of offshore wind going forward…
Onshore wind
To achieve the country’s ambitious wind power targets, the government has implemented various policy measures. Specifically, it has outlined a trajectory for the wind component under the renewable purchase obligation until 2030 and waived inter state transmission system (ISTS) charges for solar and wind projects commissioned by June 30, 2025. Additionally, new guidelines for a tariff-based competitive bidding process have been introduced to standardise procurement and define stakeholder roles. To further support wind projects, the government offers incentives such as import duty concessions, a 10 year income tax holiday, and exemptions from customs and excise duties on specific turbine components. To attract more investment in the wind sector, centralised tender activity for hybrid, firm and despatchable renewable energy, and round-the-clock projects has gained traction.
One of the key regulatory tools to promote the uptake of wind projects is the tariff regime. In 2017, India shifted from feed-in tariffs (FiT) to reverse auctions for wind energy procurement. While FiT offered guaranteed higher prices, benefiting captive and group captive consumers, the transition to competitive bidding caused a substantial decrease in tariffs from Rs 4-Rs 5 per unit to Rs 2.50-Rs 3 per unit. This change, aimed at reducing costs through competitive pricing, led to disruptions in project installations due to the significant drop in tariffs. Subsequently, the tariff regime was changed again from reverse auctions to closed bidding as industry stakeholders complained that the former regime led to unviable low tariffs due to excessive competition.
“The key challenges in the wind sector include dealing with right of way issues and engaging with state governments for support. Going forward, there is a need to ensure policy continuity and avoid knee-jerk reactions.” Purnendu Chaubey, Senior Vice President, ReNew
“Wind turbine manufacturing and project execution are fraught with high risks. The reaction time from deciding to ramp up production to actual implementation is approximately two to three years in the wind industry.” Vivek Srivastava, Chief Executive Officer – India Business, Suzlon Energy
“The timely signing of power purchase agreements and the development of well-planned transmission infrastructure are key to ensure that all wind resource sites can be fully utilised in the future.” Vineet Taneja, AVP – Business Development & Regulatory, BrightNight India
“The wind industry faced significant challenges when wind energy capacity dropped from 5.2 GW in 2016 to 1.7 GW in 2017, which resulted in a surplus of unused finished goods due to a lack of orders. This trend underscores the need to explore and secure export markets for OEMs.” Amar Variava, Vice President and Country Head – Business Development, Vestas Wind Technologies India
Recent trends indicate a rising trajectory in wind power tariffs from September 2021 to July 2024. Initially, tariffs fluctuated from Rs 2.69 to Rs 3.11 per kWh until December 2022. From January 2023 onwards, there has been a consistent upward trend, with a notable increase between June 2023 (Rs 3.18 per kWh) and November 2023 (Rs 3.58 per kWh). In 2024, tariffs have stabilised at around Rs 3.60 per kWh, with the highest rate recorded in July 2024. However, a crucial point raised during the panel discussion at the conference was that despite the increase, tariffs in the standalone wind power segment remain competitive when compared to wind-solar hybrid counterparts.
Offshore wind
India recognises the need for offshore wind energy as it addresses the limitations faced by onshore wind, such as land availability and lower energy output. To this end, the government set a target of establishing 30 GW of offshore wind capacity by 2030 as part of its broader goal of achieving 500 GW of renewable energy capacity by the same year.
To promote development and invite private sector funding in this segment, the union cabinet approved the viability gap funding scheme in June 2024. The scheme has a budget of Rs 74.53 billion to advance India’s offshore wind sector, including Rs 68.53 billion for 1 GW of offshore wind projects off the coasts of Gujarat and Tamil Nadu, and Rs 6 billion for port upgrades and logistics. Further, the first offshore wind seabed lease tender, with a capacity of 4 GW, has been issued for development off the coast of Tamil Nadu. To further incentivise investors and make future offshore wind projects more viable., the government announced an ISTS waiver for offshore wind projects. Additionally, concessional customs duties on the import of critical components for manufacturing offshore wind turbines will be provided to offshore wind
developers, who will also receive carbon credit benefits.
“VGF support for offshore wind projects is a step in the right direction as the cost of construction per MW is Rs 210 million-Rs 250 million, almost three times that of onshore wind projects.”Harsh Nupur Joshi, Chief Operating Officer, ONGC Green Limited
“Wind speeds are much lower in India compared to Europe. Due to this, offshore wind tariffs are expected to be higher in India, especially where wind speeds are low.” Dr Arul Shanmugasundaram, Executive Director (Operations), Ayana Power
“Offshore wind projects are highly capital intensive in nature. Additional incentives such as VGF are needed to make offshore wind projects viable.” Vaibhav Singh, Executive Director, PwC
To further promote the offshore wind energy sector, an amendment to the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022, was made. This has exempted open access consumers from additional surcharges when buying electricity from offshore wind projects. Further, the government has outlined an auction plan for 37 GW of offshore wind energy capacity by 2029-30.
Panellists at the conference also expressed concerns over China’s influence on the wind industry, particularly with respect to the supply of select wind components. While not all parts of the supply chain are equally affected, components requiring a gestation period of three to four years for domestic manufacturing still necessitate imports.
Challenges
Historically, the wind industry has faced setbacks during scaling up, leading to extended development times and downturns. Challenges such as varying state policies on land acquisition, delays in signing power purchase agreements (PPAs) and the need for timely transmission infrastructure development have hindered progress. Adapting to low wind sites and ongoing technological advancements is another key challenge. Developers have also highlighted specific issues, including right of way challenges and the necessity to engage primarily with state governments for support. Thus, the industry executives emphasised maintaining policy continuity to prevent disruptions.
Initially, wind power dominated renewable energy capacity from 2014-15 to 2016-17, with capacity additions of 2.31 GW in 2014-15 compared to 1.17 GW for solar. However, in 2017-18, annual solar power capacity additions (9.56 GW) surpassed annual wind power capacity additions (1.87 GW), marking a turning point. Since then, solar power capacity additions have consistently exceeded wind capacity additions. By 2023-24, annual solar power capacity additions were 15.83 GW, while wind was at 3.25 GW. Overall, growth of wind power capacity additions in comparison to solar power have decreased, while solar power has grown exponentially.
This trend is forcing wind OEMs to explore export markets, as domestic order books are dwindling. The lack of consistent domestic orders is impacting business viability and the number of wind OEMs has been decreasing over the past five to six years.
Despite the promising prospects for offshore wind, this segment is confronted with several significant challenges that require the attention of key stakeholders. The sector grapples with protracted approval processes, often extending beyond two to three years due to the complexities involved in securing clearances from environmental agencies. Compounding these delays is the inadequacy of data collection infrastructure, which hampers timely decision-making. Additionally, the industry faces a natural challenge due to lower wind speeds in India, which limits energy generation efficiency. Setting up and generating offshore wind energy is highly capital intensive, with costs ranging between Rs 210 million per MW and Rs 250 million per MW–three times higher than onshore wind. The current envisaged tariff of Rs 7-Rs 9 per unit is also higher than conventional energy sources, making it less competitive. Moreover, seabed leases are financially unprofitable and gathering seabed data is time-consuming. The shortage of skilled professionals, particularly in geotechnical and geophysical surveys, further hinders progress by affecting accurate seabed assessment and foundation design.
Future outlook
With India current share standing at 5 per cent for power converters and generators, 8 per cent for blades and 4 per cent for castings in onshore wind, India has the potential to become a leading global hub for wind turbine manufacturing. Geopolitical factors are expected to create opportunities for India, especially in response to supply chain threats from China, creating an increasing need to diversify sources of materials and minerals. In this context, the government should actively work to position India as a critical player in the global wind industry by implementing a supportive tax and incentive regime.
India’s National Electricity Plan has set an ambitious target of adding over 140 GW of wind capacity by 2030, requiring a robust and coordinated effort across the industry. To achieve this goal, an annual installation of around 15 GW will be necessary from 2024 onward, marking a significant increase from the current rate.
While wind installations rose by 51 per cent in 2023 compared to 2022, this growth is still far below what is necessary. To achieve these targets, it is essential to address the challenges highlighted by industry experts, such as adapting to low wind sites, embracing technological advancements and overcoming local obstacles such as grid issues, land acquisition and regulatory delays.
A multi-pronged strategy to expand both offshore and onshore wind energy is needed, as the panel acknowledged that neither can fully replace the other and each faces unique challenges. To address these challenges and build confidence in the sector, consistency in policies is required.
Going forward, it is essential to enhance local manufacturing capacity, particularly in areas where consolidation is feasible and replication is impractical. This includes opening up export markets and implementing favourable tariffs and incentives to attract more manufacturers and OEMs. Additionally, building a strong and sustainable domestic market is crucial. Aligning domestic manufacturing capabilities with global standards and targets will not only strengthen the industry but also ensure that India’s wind sector meets its ambitious goals by 2030.
By Nivedita Bobal and Mohammed Ali Siddiqui
Nguồn: https://renewablewatch.in/2024/09/25/evaluating-potential-industry-perspective-on-onshore-and-offshore-wind-expansion/