Wind Electricity in India: 1700 MW annually and increasing

Ajay Mathur
President Suzlon Energy Limited India
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Concept Note

Overview

Annual addition of wind energy in India has grown from ~100 MW in the late 1990s to +1000 MW after 2004 Major drivers are:
Investment by energy-intensive industries in wind energy to freeze future electricity costs Cost reductions due to decreases in production and O&M costs, and increased availability Demand enhancement due to RPS/feed-in tariff requirements, and CDM benefits

Proactive public policy; diversity of investors; and innovative business models are the ingredients of the robust Indian market Large potential to sustain growth
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Wind Energy Development in India

Installed wind energy capacity in India is now in excess of 5,000 MW

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Wind Potential in India

Sea-coast + Desert areas (Average PLF of 18-20%) Forest & Mountainous region (Average PLF of 18-30%) Mountainous, Sea Coast areas (Average PLF of 25-30%)

Dual Monsoon

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What happened in 2000-04 ?

Investment by energy-intensive industries in wind energy to freeze future electricity costs has been a major driver Market has also grown because of cost reductions due to:
Indigenization of production; End-to-end business model; and Better design

RPS/feed-in tariff requirements, and CDM benefits continue to spur demand into the medium term

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Wind energy investments enhance global competitiveness

Managing energy costs is key to global competitiveness of energyintensive industries

Energy Costs are frozen with wind energy investment

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Wheeling & Banking Facilities Enable Self-Use of Wind Energy

Self use by energy-intensive industries has been enabled by wheeling and banking facilities provided by utilities Utilities wheel electricity from the (often remote) windfarm to the industry for a charge, and bank unused electricity which can be drawn later at a charge This has greatly increased the number of investors in wind energy, resulting in enhanced competition and in making the sector more robust due to the diversity in investors

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Cost Reduction Indigenization of Production

Suzlon started increasing share of domestic content ever since its started manufacturing Other manufacturers were forced to indigenize as well for competitive reasons Government started reducing the number of components on which import duty exemption was available Almost all components of Suzlon machines are now sourced from India; all the major suppliers now have 40 to 70% domestic content

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Cost Reduction End-to-End Business Model

Suzlon, apart from manufacturing, marketing and installation, also started investing in:
pre-installation activities (wind mapping, site identification and development, evacuation lines, O&M facilities), and post-installation activities (O&M services, grid connectivity, realization of payment from utilities)

This is now the mainstream business model This has:

reduced fragmented costs associated with site development and O&M services, and enhanced availability due to better O&M services
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Cost Reduction Better Design

Suzlon acquired design centres in Europe to design Indiaspecific designs Energy generation is higher because of:
Larger rotor swept areas Taller towers Better aerodynamic profile of rotor blades Automatic control and pitching Better grid connectivity

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Renewable Portfolio Standards and Feed-In Tariffs

Electricity Act 2003 requires state Electricity Regulatory Commissions to:

mandate minimum amount of electricity from renewables that must be procured by utilities, and Establish preferential tariffs for this procurement

Five state Electricity Regulatory Commissions have mandated procurement percentages and tariffs This has led to increased investments in site development and in manufacturing-capacity enhancement

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Supply Percentage and Tariff Fixation

State

Status of RPS

Quantum

Horizon

W P Tariff (Rs/kwh)

MP

Final Regulation

0.5%

2004-07

3.97

Maharashtra

Order Issued

750 MW

2004-07

3.50

Karnataka Orissa Gujarat Tamil Nadu AP

Final Regulation Final Regulation Draft Regulation Draft Regulation Discussion Paper

5-10% 3% 5% --5%

2004-10 2005-07 2004-10 ------?

3.40 ---------3.42
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Peep into the Future

Opportunities
Rapid addition of capacity Global interest in investment Adequate Potential

Issues
Evacuation of electricity Integration of infirm power in grid management National RPS

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