Eastern winds – renewable energy in India

9 December 2016

Developing nations are forging ahead in the race for renewable energy, making up for more than two thirds of the £196.5 billion spent worldwide. Playing a pivotal role is India, with its wind capacity taking fourth position globally. Bradford Keen speaks to DV Giri, secretary-general at the Indian Wind Turbine Manufacturer’s Association, and Amar Variawa, director of marketing and public affairs at Vestas in India and South-East Asia, about the country’s ambitious goals, and the challenges threatening to push them beyond reach.

“We Indians have a very dirty habit,” says DV Giri, secretary general of the Indian Wind Turbine Manufacturers Association (IWTMA), “we speak faster than a bullet train.” When listing the many tasks faced by the Indian wind industry, there is a sense that his words almost match the speed of his thoughts. His fired-up cadence is motivating. He invites his listeners to ditch the slow-moving zephyr for swift action.

“Today, we have an annual manufacturing capacity of 9.5GW,” he says, “and we are chasing a market of 3.0GW. It is not funny. We have so much capacity lying idle.”

Giri, on the other hand, is constantly on the move. He regularly travels internationally to conferences and between Chennai and Delhi in preparation for a busy and demanding future.

In 2015, the Indian Government set the target of generating 175GW of renewable energy by 2022, with wind accounting for 60GW. “There are a number of challenges, but look at the opportunities,” Giri says. “We have installed about 28GW so far, which means we have about six years to install 32GW. We need to install year on year 5GW, which we have never done. We are jumping from 3GW to 5GW.”

India has made much progress since its first wind farms were built in 1986 in Maharasahtra, Gujarat and Tamil Nadu with 55kW wind turbines made by Vestas. Despite being a relatively late bloomer, India is now the world’s fourth largest producer, according to GWEC’s 2015 statistics, trailing China, the US and Germany. The nation’s wind industry installed 3,472MW in 2015–16, up from 3,197MW in 2011–12.

“This is a record,” Amar Variawa says, “the most in 25 years of history of wind energy in India.” The director of marketing and public affairs at Vestas in India and South-East Asia takes a moment to reminisce about the 200kW turbines of yesteryear that only stood 13m tall – compared with the now 2MW turbines reaching up to 100m.

Variawa is as excited about his country’s wind power as Giri: “We have a lot of potential. The wind sector has come into the limelight. It’s a chance to decarbonise the economy and, at the same time, create new jobs and reduce climate change.

“India is a growing economy with an intensifying demand for electricity and suppliers are struggling to keep pace. The Ministry of Finance estimates India will require $160-billion investment in renewables over the next five years – so this is what’s going to happen.”

The International Energy Agency (IEA) also estimates India will invest about $845 billion in transmission and distribution networks from 2015 to 2040.

According to the IWTMA’s statistics, as of the end of March this year, wind energy counted for 63.0% of the total renewable energy capacity of 42,752MW, and 8.86% of the total energy installation of 302GW.

Jumping hurdles

While Giri and Variawa enjoy sounding the trumpet for wind’s victorious arrival, they have been in the game long enough to know that challenges are plenty and relentless. The most imminent concern is the government’s hazy direction and, attached to this, the doubt over what comes after the generation-based incentive stops at the end of March 2017. Without any government subsidies, Giri asks, “Who will buy the power?”

Variawa is also worried about what will replace the existing incentives. “The period of uncertainty is about to start from a policy standpoint,” he says. “We need more clarity and a long-term, sustainable and predictable policy for our country.”

Part of this uncertainty is due to the divisions between India’s federal government and the local governments of individual states. Giri calls power a “concurrent subject” with overarching, nationwide policies interacting and sometimes colliding with state-based regulation.

“India is not one country,” Giri says. “There are countries within countries; the culture, language, customs and behavioural patterns are so different. We never have a dull moment. We have an exciting day every day. Most of my time is spent on policy framework and regulatory intervention.”

Indeed, that is what takes up most of the secretary-general’s time. When Giri joined the IWMTA, he was looking to step back from commercial endeavours. He had left his role as CEO at Pioneer Wincon, where he “really learnt how to run a wind-energy business”.  However, his industry friends asked him to continue working in the sector, which led him to his current role.

“We sit with the governmental agencies, regulatory bodies and central electric authorities,” Giri says, “to see what can be done for better and bigger penetration.” The IWTMA has to remain at the forefront of policy to make sure its members can run their businesses effectively.

Giri describes the association as a one-stop shop or an end-to-end solution provider. Whether the needs are a single turbine or a capacity of 100MW, the IWMTA provides the land connection, wind resource assessments, technology, equipment, contractors and engineers, as well as operational maintenance. It also helps its clients with governmental approval and challenges any regulatory and, very importantly, tariff issues on their behalf.

“We are not doing it for the IWTMA,” Giri says. “We have to do it for our customers, because unless the feed-in tariff is good and it gives them a meaningful return on investment, they’re not going to install turbines.”

India’s federal government is ditching the feed-in tariff model to experiment with reverse bidding, which Giri thinks is a bad decision. Citing Brazil as the only place where this system works – due to the help of the Brazilian National Development Bank – he is not convinced of the method’s validity in India.

“If they have a 1GW business come up for reverse bidding,” Giri says, “but consultation to find the line for transmission is still going on, how do we contain charges set by the government? What happens if there is no evacuation? What is the payment security? Unless these questions are answered, people will not want to take part in the bidding at all.”

Variawa is also concerned about the phasing out of the feed-in tariff, and about power-plant owners not being paid on time to keep the facilities up and running, but this is part of his primary concern regarding an unclear governmental policy.

He is swift, however, to offer praise: “The ministry has been working hard, dedicatedly and collaboratively.

They call for consultation with all the players in the wind industry and are really open to suggestions and improvements.” 

Exploring open waters

Leaving land for a moment, the FOWIND project is being led by GWEC and is armed with €4 million from the EU delegation to India. Working in close cooperation with India’s Ministry of New and Renewable Energy, the consortium aims to make the country’s transition to offshore wind energy seamless and economically successful. However, neither Giri nor Variawa are overly optimistic about it.

“The cost of offshore will be about three to four times that of onshore,” Giri says, “which means the tariffs are going to be three to four times more than onshore tariffs.” With many distribution companies “reeling under bankruptcy”, his question is, once again, who will buy this energy? “The buzz today in wind is that no one gets a subsidy.”

Variawa says FOWIND’s draft report is expected in March 2018, but does not foresee offshore power arriving in India before 2020. He also cites the estimated offshore tariff of 22¢/KWh as prohibitively burdensome.

The four-year project’s main focus is finding the best production sites in the states of Gujarat and Tamil Nadu. The country has a coastline of about 7,500km, which is a potentially fruitful bounty for offshore-energy producers. However, Giri’s concern – and it may or may not be warranted – is that India has a deep but soft seabed, which may require greater foundation costs, driving prices higher. Add to this the need for approvals and permission from over 20 agencies, and the bright lights of hope are threatened by dim reality.

“The commercialisation of offshore projects is a couple of moons away,” Giri says, “but our onshore potential is 302GW, which is workable where localisation is as much as 75%. Everyone understands how to work on land; I think we have a lot of meat on our plates still left.”

The localisation Giri mentions – which he places more conservatively the second time around at 60–75% – is a point of pride for the country’s wind energy market. The ‘Make in India’ campaign is a drive to increase local production and manufacture.

Variawa places the number of original equipment manufacturers at 18 and Giri cites makers of towers, gearboxes, blades, castings, forgings, bearings and even “the guys who do the painting systems” as members of the IWTMA. “Their fortunes lie with our fortunes,” Giri says.

The turbines are manufactured in India, but “almost all the technologies” are from Europe. Manufacturers in India are either wholly owned subsidiaries of European companies or involved in technology transfers or joint ventures.

“Knowing how weak the Indian rupee is,” says Giri, “localising is the important thing. I am happy to say that most of the European and Chinese manufacturers are willing to set up shop in India to start manufacturing in the country, localising things.”

Hitting the bullseye?

The government’s 60GW target is bold and ambitious. It is a nice round number for the industry to focus on, but how realistic is it?

“It will go like a bomb,” Giri says. That optimism, however, is conditional on interstate sales being permitted from windy states, such as Tamil Nadu, to areas in greater need, and at reasonable transmission rates. It also depends on whether the government mandates its national renewable portfolio obligation. “It is currently a guideline,” Giri says. “It has to become an act, otherwise people don’t listen.

“It is not only funding, customers and evacuation lines. We need to have competent manufacturers that can ramp up their production to a sufficient supply. The entire supply chain needs to be geared up. We need contractors who will do their job; we need to find out how the transmission lines are going to run.”

The target, albeit ambitious, has been set. The country needs to install 5GW of wind energy each year until 2022 in order to reach 60GW. With a strong ethos of local manufacturers and a government prioritising renewables, the local wind industry has a lot to be motivated about. Whether the lost governmental subsidies can be replaced with viable incentives remains to be seen.

For those caught in the crosswinds of ambition and logistics, such as Giri and Variawa, there is only one way to make sure targets are met and the industry is sustained. There may be many questions yet, but the answer is blowing in the wind.

Amar Variawa is director of marketing and public affairs at Vestas in India and South-East Asia.

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