Viability, implementation risks constrain outlook for wind sector:Crisil

The country's wind energy sector is likely to see a slow growth with regard to capacity addition over the next five years, Crisil Research said Wednesday. The shift to a competitive bidding mechanism has slowed industry growth due to a significant fall in tariffs, triggering a decline in both bid response and profitability for original equipment manufacturers (OEMs), CRISIL Research said in a statement.

It said capacity addition is expected to rise by 14 to 16 GW over fiscal 2019 to 2023, entailing investments of Rs 1,100 billion (Rs 1,10,000 crore). Capacity additions will primarily be driven by central government allocations with relatively stronger counterparties like Solar Energy Corporation of India (SECI) and PTC, reducing risk as compared to direct exposure to state discoms, the statement said.

State auctioning, on the other hand, has slowed as several states have signed power supply agreements (PSAs) with PTC and SECI to procure wind power under the schemes auctioned by them, to help fulfil their non-solar renewable purchase obligations targets. Moving to competitive bidding mechanism in the wind energy sector has caused a slowdown in capacity addition as participants are yet to adjust, with tariffs having fallen to Rs 2.4 to 2.6 per unit, from Rs 4 to 4.5 per unit under the feed-in-tariff regime. Such low realisations remain unviable for the entire value chain at current capital costs of Rs 6.8 crore to 7.2 crore per MW.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)