Favourable regulatory environment and eased lending is expected to deliver better than expected capacity addition in India’s wind energy sector.
Indian rating agency ICRA expects that 2.8 GW of wind energy capacity will be added in the current financial year, between April 2015 and March 2016. This will be 20% higher than the capacity added during the previous financial year, and 16.7% more than the targeted capacity addition of 2.4 GW. During the first six months of the financial year, 933 MW of wind energy capacity has already been added.
The capacity addition target forecasted by ICRA is lower than the earlier estimates of the Indian Wind Turbine Manufacturers Association, which had predicted 3.5 GW capacity addition this financial year.
The diving forces behind this enhanced capacity are the same policies we have discussed several times already on CleanTechnica. Apart from the renewable purchase obligation, attractive feed-in tariffs, financial benefits like generation-based incentives, and accelerated depreciation, the factors that have changed in favour of the project developers are falling lending rates and capital costs. The most recent of the positive measures implemented by the Government was the introduction of tax incentives for manufacture of wind turbine equipment.
Wind energy has been the leading technology in terms of installed capacity for several years now as costs continued to fall due to increased competition among turbine manufacturers which eventually also started providing end-to-end services, including project development, operation, and maintenance.
The Indian wind energy sector is expected to reach new heights as the Government recently approved the national offshore wind energy policy. The policy has opened up potentially the entire 13,000 kilometres of the Indian coastline for wind energy projects, with the first auctions of offshore blocks for the projects to take place in January 2016.
By March 2022 the Government aims to have an operational wind energy capacity of 60 GW. Several leading project developers have set ambitious goal to set up wind energy projects over the next 5-7 years. The total capacity addition commitment received by the Indian Government from such developers is around 48 GW.