On 29th June, MEC Intelligence hosted a Webinar with WindInsider on “Top 5 Wind Power trends: Shaping the Wind market in 2020-2021”. We uncovered the key trends in the Indian Wind industry across the wind value chain with financing, regulatory, WTG OEM, developer, supply chain, and O&M.

The expectations in the Indian wind market are driven by the top-level targets set by the government. The government had set the target of 60GW of installed wind capacity by 2022, which will increase to 140 GW by 2030. The market saw a drop in installations after 2017 despite the big targets set by the government. The key reasons were stringent tender conditions; low tariff caps; off-taker risks; unavailability of the grid; and/or land availability. The federal government took cognizance of these issues and have come up with mitigation steps.

MEC+ forecasts that the target for 60 GW will be missed even if all the bottlenecks are resolved. This analysis was done before India announced a lockdown of movement of labor and commercial activities on Mar 24. From where we stand today, COVID-19 will impose a drag on the market growth, and the actual forecast is expected to be closer to 48.3 GW, the low case scenario.

In the webinar, key trends were discussed between Sidharth Jain (MEC+), Amar Variawa (Vestas), Vipul Jain (ABJ Drones), Christian Halken (KK Wind solutions), Pratibha Bajaj (IFC), Gaurav Sood (SPRNG Energy), Gopan PR (Envision Wind). Following are the excerpts from the discussion:

Trend 1 # Impact of Financial Crisis on Equity-debt favorability and need for Innovative Financing

Financing for Renewables have changed over the last few months in the ongoing economic crisis with Banks and NBFCs have taken a reclusive approach post-IL&FS set-back. India needs to attract more than $300 bn to finance RE projects towards 2030 which has become difficult for the major financiers of RE projects – Banks and NBFCs, to lend.

Green bonds and corporate bonds are available to large payers who have strong backing. For lower credit off-takers, interest rates are high which makes it restricted financing. Several companies are also looking at Mezzanine Funding which is expensive; developers are unable to compete with the high costs of financing for the lower tariffs available in the market. Alternate financing through InvITs /YieldCos (Infrastructure Investment Trusts) and IPO has shown limited success.

Offshore/International debt is currently the only avenue available for RE financing, however, funds are countable and available at par with expensive domestic funding lend rates. Today, many players are seeking out offshore international debts.

Ms. Pratibha Bajaj from IFC agreed that the financing situation looks quite grim in India. However, some green shoots exist, IFC is comfortable in looking at financing the new hybrid tenders since they have experience in financing these tenders globally. IFC expects that other lenders will follow suit.

Trend 2 # Evolution of the role of wind as compared to solar and hybrid solutions in India energy mix

The market is evolving into new system-level planning with the new species of tenders getting oversubscribed-Peak power supply and RTC tenders. This has been a subtle shift towards more sophisticated tendering with a focus on power outcomes rather than technology, which is good for the growth of wind and solar.

With this new system-level planning, key success factors are also changing quickly which needs to be taken care of by the stakeholders, The new market dynamics such as technology competitiveness, system-level need, business model, and financial engineering need to be considered while planning.

Mr. Gauarav Sood from SPRNG Energy shared perspective that industry can continue lobbying with the government to look for avenues for bringing transparency in the land, evacuation, permits, and approvals to solve the issues for infrastructure. However, there is a need to create an ecosystem in the wind sector where we can discuss how do we ensure the competitiveness of wind for solar otherwise, wind seems to be moving towards supporting role.

Trend 3 # Criticality of technological R&D for wind competitiveness and relevance of 3 MW model launch

The wind industry is getting challenged due to limited grid evacuation, head-on competition with solar, and cap on best wind resources, New technology is needed to unlock the economic potential at low wind sites which seem limited until now, as orders are majorly pegged on 2 MW model. The question of 3 MW launch, continues hanging in the air, but low volume outlook and existing significant manufacturing capacity make it difficult to pledge new investment.

Mr. Gopan PR from Envision Wind agreed that technology is important, and the global wind market has moved towards 3 MW models a few years back. Indian wind market should also move towards 3 MW wind turbine model which will help in lowering down the costs due to economies of scale.

Additionally, Leading wind component OEM representative, Mr. Christian Halken from KK wind solutions shared that KK wind solutions is supplying electronics for 2 MW wind turbines to OEMs globally and for making a shift in India from 2 MW-3 MW wind turbines, KK team is working on it.

Trend 4 # Make in India for wind industry-towards independence and autonomy

85%-90% of the supply chain by value is already localized in India, the potential remains in generators and power electronics. The government’s latest push to RE industry on localizing the last mile might push OEMs to localize further to gain independence from import dependence. However, the success of efforts to localize will depend on the readiness and competitiveness of the Indian supply chain.

Mr. Amar Variawa from Vestas highlighted that in the last meeting scheduled by Ministry on 24th June, the focus was on Make in India initiative and making India self-reliant. All the RE players were urged to take pledge around localization.

Trend 5 # Improving Wind Profitability through Digitization and AI

More and more developers have been focussing on moving asset management in-house and optimizing existing portfolio output to maximize returns. A major pillar in the same is the use of machine learning and AI for predictive maintenance. The trend has become more pronounced in the market with a restriction on men and material in lockdown due to pandemic and the usage of drones has increased for inspection.

Mr. Vipul Jain from ABJ Drones agreed that the market for digitization is opening in India. In the last 6-8 months, ABJ Drones have helped multiple asset owners identify issues in their wind turbines using thermal imaging and drones rather than physical imaging.

Find out more on the Indian Wind industry:

MEC+ is also planning to organize a series of webinars in the future. The topics will be:

  • Offshore Wind in India: Outlook and Feasibility
  • C&I market: Challenges going forward
  • Supply chain set up in India: Focus on the Domestic market or Export market?

If you are interested in the above-mentioned webinars or getting insights on any other topic related to India renewable sector, please write to info@mecintelligence.com