Wind Energy Capacity Addition To Remain Subdued This Fiscal, Says ICRA
Wind energy capacity addition is likely to be subdued this financial year amid challenges like payment delays from distribution companies and a tight financing environment, an ICRA report said on Wednesday.
Though on a year-on-year basis, capacity addition is likely to improve to about 2.5 gigawatt in fiscal year 2020, from 1.6 GW in FY2019, achieving the 60 GW target set by the government by December 2022, remains a challenge, the report said.
"In this context, ICRA has recently revised the outlook for the wind energy sector from stable to negative," an ICRA statement said.
According to ICRA, the wind power sector is facing significant challenges because of delays in making payments by the state distribution utilities and execution delays being faced by the projects.
This apart, the tariff uncertainty for the wind power projects in Andhra Pradesh has affected investor sentiments in the sector. This is also reflected in the slowdown in the tendering activity of wind power projects by 67 percent to 2.3 GW in CY2019 (calender year) from 6.9 GW in CY2018.
Moreover, many of the bids called by central nodal agencies remained under-subscribed, it added.
"Against the 5 GW to be commissioned as of December 2019, as per the timelines provided under the bids awarded by the Solar Energy Corporation of India, NTPC and state utilities, only about 2 GW is estimated to have been commissioned," said Girishkumar Kadam, sector head and vice president - corporate ratings, ICRA.
Moreover, the actual execution on ground has been hampered by delays in completion of land acquisition, securing transmission connectivity for inter-state projects, financing challenges due to concerns over bid tariff viability and delays in approval for tariff adoption from the regulators.
Further, the bid tariff discovered in the recent wind power auctions continue to remain at less than Rs 3 per unit and highly competitive against the conventional energy sources, it added.