Wind sector gasps, seeks breather through extension of sops

The demonetisation move is likely to affect the wind power industry.

Out of the 4,300 MW of wind power capacity that was estimated to get installed in the current fiscal, around 1,500 MW will get put off beyond March, due to operational issues arising out of the currency crunch.

“Logistics is a huge problem, many of our trucks are stuck,” said Madhusudhan Khemka, Managing Director of wind turbines producer ReGen Powertech. The industry will be affected because “this is the time of peak activity”, he added.

Typically, most of the installations happen in the last quarter of the year and preparations for that begin in the third quarter — which is now.

While the postponement of projects commissioning in itself is not a problem, the issue is the ‘generation-based incentive (GBI)’ that expires in March.

Those projects commissioned before March will get 50 paise for every kWhr of electricity they produce as incentive for the next 25 years. But the quantum of the payout is capped at ₹1 crore per MW per year.

“This means the industry will be set back by ₹1,500 crore annually,” said DV Giri, Secretary-General, Indian Wind Turbine Manufacturers’ Association.

The industry is, therefore, asking the Centre to extend the applicability of GBI by at least till the end of the first quarter of the next fiscal, Giri said. It is learnt that the Wind Independent Power Producers’ Association has also appealed for extension of GBI.

Will there be a softening of land prices — crucial for the wind (and solar) industry?

No immediate gain, feels the industry. In the present model, energy companies usually buy chunks of developed wind farms — equipment manufacturers usually sell installed capacity rather than just the turbines.

Many of the turbine manufacturers are already sitting on land banks and it is not unusual for companies to hold land worth 4,000 MW. So, any short-term softening of land prices will not help.

The industry will suffer in the short term — perhaps a year, said ReGen’s Khemka.

As for the long term, it is hard to say, he added. It depends a lot on how the “system accepts the new culture.”