Federal or Central auctions in India for wind-based projects have been approximately 10 GW. The projects awarded under the mechanism are in states with accessibility to wind resources and use interstate (ISTS) grid to transmit power. 26 ISTS substations are earmarked for the evacuation of wind generation from these auctions. However, the pipeline is struggling to get evacuation infrastructure as there are only 2 substations which are preferred. 63% percent are at a single substation and its extension in Bhuj, Gujarat, another 11% are in the Tirunelveli cluster in Tamil Nadu.

The central auctions required projects to compete on prices which meant targeting the lowest costs and highest yield sites. The area of Kutch and specifically Bhuj in Gujarat and area of Tuticorin in Tamil Nadu has the best wind resource in India, with sites available at 7m/s+ wind speeds (based on NIWE met mast data). The superior wind resource combined with the availability of cheap revenue[1] land in Gujarat led to a higher concentration of wind projects in the area, as compared to Tamil Nadu.

[1] Government land that can be allocated to developers for wind project development. Revenue land is typically 60–70% cheaper than privately held land in India.

Such a high level of aggregation of projects was not anticipated by the auctioning authorities, transmission utilities, and state authorities as well. The lop-sided concentration of auctioned capacity challenged grid availability in the short-term to medium-term; given the fact that projects work with a timeline of 18–24 months while substation augmentation and construction take 24–48 months. Currently, 5.6 GW is commissioned or scheduled for commissioning at the substation of Bhuj against 6 GW existing and planned capacity, however, the substation capacity will come online in a phased manner, creating some delays until 2021.

The secondary impact of the concentration of central auction projects in Bhuj & Gujarat was that the state authorities were aggrieved by the use of cheap revenue land and best wind sites to fulfill the power needs of other states in a cost-effective manner. This led to a change in the local land policy to restrict land allocation to central auctions. The combined effect of delay in grid augmentation and uncertainty of land availability has affected nearly 80% of the projects in the pipeline.

The impact of unplanned grid availability impacts new pipeline creation as well. Despite 26 substations outlined by PGCIL for wind development, only six substations are currently viable for new capacity bidding, of which three are dicey.

MEC Intelligence (MEC+) discusses the impact of grid and land issues on forecasts in the latest report — “India wind outlook towards 2022- Looking beyond headwind”, access report here, also attend our webcast on 20th May to unlock the report finding and address the most important questions that evade the sector today. You can register and submit your queries here.

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