Wind Repowering in India Waits for a Favourable Wind

The benefits of solar and wind energy as clean alternatives to oil, coal and gas are well established globally. Though many countries started their solar journey early, India’s solar-energy build-up has been consistently gathering momentum over the last decade, with the last five years seeing a sharp spurt.

The wind energy sector, on the other hand, has grown steadily over three decades. However, in 2015-16 it hit a slump, from which, industry experts told Saur Energy, it is still struggling to bounce back. India has a more mature wind energy market as compared to solar, but in the last five years solar has outstripped wind in terms of total installed capacity.

As per NITI Aayog’s Report of the Expert Group, wind energy sector is expected to clock 60 GWs of installed capacity from a total RE target of 175 GW by 2022. India’s current total installed wind capacity stands at 40 GW, as on November 2021. In 2016, India had 27 GW of installed capacity. The slump has ensured we added only 13 GW in the last five years.

Even though India may continue (barely) to retain its position as the fourth largest in terms of installed wind power capacity, the government’s aggressive push to solar energy are making wind energy look like solar’s step-sibling. This feature does not seek to draw comparisons between these two critical renewable energy sources. It seeks to analyse the many factors that have affected the wind energy sector, seek to know what has knocked the wind out of India’s wind energy sector, and what can be done to turn things around.

Striking a Perfect Balance

Sharad Pungalia, CEO-Business, Utility Scale Projects, for Amplus Solar says the general momentum has been towards solar, which, apart from being cost-competitive, also has a “low gestation period” and provides “minimal development challenges” in comparison to wind projects, which required installations at high wind density locations.

So, where does wind stand? A senior official from a leading wind player expresses optimism, “Wind certainly has a promising market. Hydro has many ecological and funding issues. So, wind and solar will constitute major portions in the future energy mix.” He anticipates that both offshore and onshore installed capacity will grow in a big way.

He also says some factors like increasing cost of imports of solar components and availability of quality water “can limit attracting solar projects”. “When it is not economical, I don’t see the same momentum being maintained.”

Pungalia says, “In India, the wind and solar generation profiles complement each other, and an adequate mix is essential to achieve sustainability targets in a cost-competitive manner.” He agrees that wind energy brings distinct value to the overall energy mix as it is also available during the non-solar hours, while adding that, “We expect significant capacities coming from wind-solar hybrid projects.”

Wind players point out that there are a lot of standards and restrictions put for wind projects. Says an official, “Besides the struggle to meet 80-85% of localised requirements for state specific projects, you really need a manufacturing facility in India to fulfil the various criteria. All such standards and restrictions are not much on solar projects.” We need to look at performance of solar and wind farms that are already installed, he says, “since deterioration of solar and wind is a major concern”.

Why Repowering?

Investment bank Lazard reckons generating wind power from new plants costs 72% less than in 2009, which makes wind one of the cheapest energy sources on the planet. A review report of the National Institute of Wind Energy (NIWE) and The Gandhigram Rural Institute on “Repowering opportunities of wind turbines in the state of Tamil Nadu, India” shows the hurdles that may be hampering progress in this sector. “The countries that started wind turbine installations early on are now facing problems that the land with good wind potential is occupied by older Wind Turbine Generators, as seen in India.”

In August 2016, the Ministry of New and Renewable Resources (MNRE) came up with a policy document on repowering of wind power projects in India. The stated objective of the document was to have a policy in place to promote optimum utilisation of wind energy resources by creating a facilitative framework for repowering.

However, experts say, ambiguity in the policy may not help achieve the desired targets. While we need new wind capacity at a faster pace, what is also critical is the pace at which repowering of old wind turbines happens. In India, most wind-turbines installed up to the year 2000 were of capacity below 500 KW, are at sites with high wind energy potential.

As per the Ministry of New and Renewable Energy (MNRE) data, Tamil Nadu has the highest installed wind power generation capacity – 9.6 GW (as on March 31, 2021). Gujarat is second with 8.56 GW. Tamil Nadu and Guja[1]rat have the oldest wind turbines, many of which are located at some of the best sites for harnessing wind power. For better utilisation of wind resources and increased safety, these old wind turbines need to be repowered.

Market reports suggest that repowering of old turbines of capacity less than 1 MW with modern turbines of 2-3 MW could make a huge difference in boosting India’s wind power generation. We now have improved rotor diameters, turbine sizes, pole length and hub heights. Martand Shardul, Policy Director for Global Wind Energy Council (GWEC) said, “As we know the target for wind energy is 140 GW by 2030. There is 8 GW repowering potential for projects that were commissioned before 2012. The potential of course increase for ones commissioned after 2012 and before 2017.”

Shardul adds that we have not been able to make much use of this because of several underlying challenges around, business models, institutional structures, technical and financial issues among others.

He says, when we talk of repowering, the relevant question that comes to my mind is how do you define repowering? “It can be interpreted in many ways. Someone may say, if there is a WTG of 500, KW then I will replace it with 1 or 3 MG WTG. Someone else may say, I have a wind farm and I will exceed the capacity by ‘X’ factor, or you may say I will add solar to it. There are different ways you can look at repowering.” There is another factor which adds to ambiguity when we go for repowering.

“How do we determine which turbine is eligible for repowering, is it based on age of turbine or wind farm size or minimum number of turbines that can be replaced. Why (basis on which) and how we repower is important,” Shardul adds. Most of the units that are eligible for repowering are connected to 11 kV lines but when we go for repowering we might need minimum 33 KV lines.

As per industry estimates, more than 95% of wind potential is concentrated in five states of southern and western India. Tamil Nadu, which is a pioneer in harnessing wind power has wind turbines as old as 30 years. It makes them ideal for repowering. Tamil Nadu (834 MW) and Gujarat (153MW) lead the repowering business opportunity. Estimates of repowering potential for Wind Turbine Generation systems with capacity sizes less than 1,000 KW, and with date of commissioning prior to 2002, is 1,577.4 MW.

The NIWE report says, difficulties are faced in seven windy states of Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Madhya Pradesh, Rajasthan, and Tamil Nadu. Though new locations are available for wind farm development, they do not have adequate intensity of wind power density. Since new Wind Turbine Generators (WTGs) have become larger, and land with excellent wind opportunities increasingly scarcer, the most techno-economic option could be to replace the old WTGs with new WTGs.

NIWE’s report says that with the acceptance of the option of replacement of large capacity WTGs on existing locations, repowering can contribute to realization of national targets. It can be expected that countries that started early with wind energy should also be the leading countries on the repowering front.

A wind industry official says, “Repowering as a concept is both accepted and appreciated by everybody. For OEMs, it’s a good market, for developers’ huge investments are involved, and for the government it will help achieve the ambitious targets faster, having already identified sites.”

There are certain challenges involved, vis-à-vis the main stakeholders, like existing investors and discoms. Initial investments were made in smaller wind turbines. He says, if you have to repower or replace, you need four to five investors for replacing one turbine. There are certain difficulties in mobilizing investors.

Shardul adds a perspective here, “The question is who would finance repowering of old wind turbines? Many wind turbines have long term PPAs which have fixed the tariffs. The MNRE policy on repowering does not provide any clarity on who takes the onus of repowering the turbines, whether it should be the wind turbine generators, states or the developers.“

The wind power majors official says, from a DISCOMS’ perspective, if you repower, you get excess power, which is obviously welcome, but the only thing is at what price? The PPAs earlier agreed to were valid for 25 years. Discoms have considered acertain ‘X’ amount of output from a particular wind farm. So, if the output goes up by 20-25 %, discoms will have to do the planning in terms of overall power offtake. And that is a challenge, he says. He also points out, the land holding is fragmented, and if someone wants to go for aggregation, at what price should the tariff be paid? Apart from this, you have the unique challenge of transporting large wind turbine components. The issues related with transportation of blades are a big bottleneck for the industry. A report prepared by National Renewable Energy Laboratory (NREL) for the US market said, weight of nacelles, the turning radius for blades and weight, and the vertical and horizontal clearance for tower sections are a major barrier impeding component transport.

Physical transportation limitations are further complicated by regulatory challenges, which vary significantly between local and state jurisdictions. Besides, many wind turbine sites are at remote locations or in difficult terrains. Reports state, modern wind turbines are more efficient and generate up to 20 times more electricity than those installed 20-25 years ago. The modern ones are taller, larger and have longer blades. The wind turbines today are as high as 180 m and have blades as long as 80 m.

Global repowering trends

Repowering of wind farms first started in the 1990s in Denmark. The country saw great value to the economy and the environment in replacing older wind turbines. Denmark’s policies helped them in making wind power as a major electricity generation technology of the 21st century.

Reports show that in other mature markets like the US and other parts of Europe there is great potential in repowering. Some of the best wind sites are occupied by some of the oldest projects. As per estimates, nearly 40 GW of Europe’s wind turbines will be about 20 years old by 2025. Europe’s wind industry is increasingly looking towards repowering to help meet renewable energy and decarbonisation goals.

It is expected that global wind power capacity may reach approximately 977 GW in 2030 (905 GW from onshore winds, and 72 GW from offshore winds). To expand wind power generation, besides new offshore wind farms, the existing farms can be supplemented with new and higher-rated WTGs after repowering.

As reported widely, Europe plans to dismantle its first generation of onshore wind turbines. Giles Dickson, CEO of WindEurope had spoken about it at a conference last November. He had said that it was crucial that we keep the sites going and replace the old turbines with new ones. “They’re the sites with the best wind conditions, and the wind farms have become a well-established part of the local economy.”

For the European wind industry, the model of repowering is not new. Germany, Denmark, Spain and the Netherlands combined have more than 100 GW of wind power capacity. According to German Wind Energy Association data, 24% (339 MW) of Germany’s new wind power capacity, commissioned in CY2020 came through repowering older projects. Germany repowered roughly 7 GW of older wind capacity.

Conclusion

The average annual wind power capacity addition over the last five years has been only about 2.48 GW. Wind power official says, if we go by the targets India has, there is a need to add onshore capacities of about 8000-9000 MW annually until 2030. But at the moment we are only adding about 2500 MW annually. “We need to triple the capacities and continue the momentum for the next 8 years,” he says.

According to Sharad Pungalia, “Over the last couple of years, there has been a slump in signing new agreements. Few of the signed agreements might be witnessing an increase in project costs resulting from the recent surge in commodities. However, the develop[1]ers should be able to absorb the incremental costs as one would expect the bidders/developers to follow prudence and adequate risk-adjusted calls while committing/bidding for such large-scale projects.”

The captioned price difference between wind and solar is at the generation bus-bar level, say Pungalia. On a delivered cost level, the difference between wind and solar will be around 10-15%. He adds, in order to incentivise the buyers (discom’s/large C&I customers), the government should promote wind-solar hybrid opportunities by extending relaxations in the DSM charges and Open Access Charges exclusively for such projects.

The estimated potential is bound to increase with upcoming technological developments that will make it possible to harness wind energy at a hub height of 150 m. The sector’s revival is absolutely necessary to achieve India’s renewable energy goal of 500 GW by 2030, says Shardul.

The Centre must focus on revitalising the sector. As per a recent report of the Global Wind Energy Council (GWEC), the cost of wind energy is expected to decline by seven per cent compared to coal. But the present installation pipe[1]line is highly uncertain as projects are being delayed or getting cancelled, and new auctions are getting under-sub[1]scribed. The report further says, the grid augmentation gestation period of 36-48 months is double the project gestation (18-24 months). This needs to be addressed at the planning stage. Result[1]ant short-term grid non-availability also acts as a bottleneck in businesses’ participation in new auctions.

Greenfield wind projects are land-intensive and location-specific. Further Shardul adds, retrospective changes to land allocation policies create substantive delays. According to GWEC’s report, land caused 93 per cent of the delays in projects allocated through central auctions.

Shardul says, “Some legacy issues relating to wind generation like payment, PPAs, land acquisition must be taken care of. Further tenders that happen, they have to be honoured adequately based on an annual plan.“

There are additional financial liabilities that MNRE policy put on new projects, leaving no incentives for repowering projects. For the latter, the MNRE says the Indian Renewable Energy Development Agency will provide an additional interest rebate of 0.25% over and above that available on loans for new projects. IndiaSpends recent report had quoted IREDA officials saying that no one had availed repowering rebate till May 2021.

Pungalia says, “Since repowering of existing sites would require higher evacuation capacity and additional land, the critical challenges would be constraints in the available transmission and land infrastructure at existing sites. In addition, the current projects under long term PPAs would also hinder repowering.”

“The lack of a regulatory framework to facilitate repowering is the only gap. We believe repowering would make a good case for financing. The lenders and investors should have no issue considering the same.”

A senior official at a wind power major wraps up saying, “The MNRE repowering policy, hasn’t helped much in repowering projects. There is no clarity regarding at what price power can be bought by the DISCOMS, bidding scenario, clarifications on what will happen to existing PPAs and tariff regime etc. These are very critical.” He adds, “What we suggested is that one can take the average of the last three years’ generation and add that amount at the old rate, and excess can be paid at the new rate.”

Our recommendation to the government is to move away from a centralized auctions system. For instance, he points out that an institution like Solar Energy Corporation of India (SECI), can only go for 2500 MW auctions maximum, so the balance will have to brought from other intermediaries like NTPC, NHPC. State level bidding must be encouraged.

Further, clarity on a banking policy is also much needed. “It cannot be different in each state. That confuses the investors. A centralised push is required, which can be adopted by states. Because of lack of clarity, wind states are being penalised indirectly or inadvertently. The actual advantage of lower tariffs is not going to primary wind generating states that are shelling out their land and wind potential and is going to states which are actually not doing anything to aid wind power generation development,” he says.

He quotes UP and Haryana as examples of states that have historically not contributed to wind power development but are getting power at a cheaper price. Whereas, Karnataka, Maharashtra, Gujarat, Tamil Nadu have extensively contributed, but have not been able to get lower tariffs.

On the contrary, when they get an opportunity to trade off excess power (on fulfilling their RPOs) to other states, a portion of the fixed tariff goes in the kitty of SECI. The opportunity of making profits is taken away, without SECI contributing to the development of wind power generation. “This is something that needs to be checked at the macro level.”