India Wind – A Review Of 2013

The calendar year 2013 has been a tough year for the Indian Wind industry. It added only 1573 MW of generation capacity during January- October 2013(Source: MNRE), and is likely to register a negative growth compared to the previous calendar year 2012 when a total of 2336 MW was installed. (Source: GWEC).  It may be recalled that the growth of wind declined in 2012 compared to 2011 as a result of withdrawal of Accelerated Depreciation(AD) Benefits and Generation Based Incentives(GBI) with effect from April 2012.

While the GBI was restored in 2013, the lack of AD benefits, the lack of enforcement of Renewable Purchase Obligations(RPO) and the resultant stalling of the Renewable Energy Certificates(REC) market resulted in the negative growth of the sector. This situation forced many companies to rethink their renewables strategy, and some of the major business groups like DLF and TVS exited the sector through asset sales. On the other hand, quite a few companies backed by firms like IFC, IDFC and Goldman Sachs among others, increased their exposure to the Indian wind sector. To sum up, the year was one of consolidation of the industry.
In Tamil Nadu, the leader of Wind in India, the lack of sufficient infrastructure was a recurring theme with thousands of MW of capacity idling during peak season due to lack of transmission infrastructure. ­
On the equipment front, the competition from China intensified with at least two companies – Sinovel and Ming Yang – getting approvals from Centre for Wind Energy Technology(CWET) to sell some models of their turbines in India.
Here is a summary of some of the major happenings from the Indian wind market and policy/regulatory fronts.

Quarter 1

January 2013

  • Sinovel, one of the largest Chinese wind turbine manufacturers, received approval from Centre for Wind Energy Technology to sell its machines in India.(Link)
  • Mahindra group indicated its intention to enter the wind energy sector(Link). 2 months earlier in November 2011, Larsen and Toubro(L&), a major player in Solar, also announced its interest in the wind sector(Link) and in October 2013, L&T announced that it received an order for turnkey EPC of a 25 MW wind farm(Link).
  • Darby Overseas Investments, the private equity (PE) arm of Franklin Templeton Investments, announced its plan to exit from Bhoruka Power, a company engaged in renewable energy(Link).
  • IFC announced its plan to lend for  Rs. 41 Crore for a 20 MW wind project by Bhilwara Energy Limited(Link).

February 2013

  • Rajasthan announced a competitive bidding process for allocation of 300 MW of wind energy projects.(Link). The “competitive bidding” process was opposed by the wind industry(Link) and July 2013, Rajasthan Government withdrew the tender for allocation following petitions against the process by the Indian Wind Energy Association and Mytrah Energy Ltd(Link).
  • Restoration of Generation Based Incentives(GBI) for the wind sector announced in the union budget(Link). After 6 months, the Cabinet clears the GBI in August 2013(Link).

March 2013

  • Mytrah Energy announced plans to acquire 59.75 MW wind assets(Link), but scrapped the deal in August 2013 citing uncertainty in regulatory clearances and unresolved due diligence findings(Link).

Quarter 2

April 2013

  • As part of its exit from the wind business, DLF announced sale of 2 wind power assets in Tamil Nadu(34.5 MW) and Rajasthan(33 MW) for Rs. 241 Crore.(Link)
  • In another exit, VRL Logistics sold its 42.5 MW Wind assets to Amplus Infrastructure Developers(Link)

May 2013

  • For the first time in about a decade, Suzlon lost its leadership position in the Indian wind market installations for the financial year 2012-13(Link).
  • According to the World Wind Energy Report, India retained its position in the top 5 wind energy markets in 2012(Link).
  • MNRE released a draft offshore wind policy(Link).
  • The lack of sufficient transmission lines in Tamil Nadu was clearly felt during the peak wind season, with about 800 MW of wind power lost due to evacuation issues(Link).
  • In another exit, Lanco divested a 10 MW wind farm in Tamil Nadu(Link).

June 2013

  • Goldman Sachs invested $135 million in the Indian wind energy firm ReNew Power Pvt. Ltd., making it one of the largest renewable energy investors in India(Link).
  •  IDFC Ltd., India’s biggest financier of clean-energy projects, said that will invest about Rs250 crore in Green Infra Ltd. a renewable energy developer, joining Goldman Sachs Group Inc. in adding to holdings in the nation(Link).

 

Quarter 3

 July 2013

  • After selling its wind assets in Rajasthan and Tamil Nadu, DLF sold its wind assets in Gujarat(150 MW) for Rs. 325 Crores to BLP Vayu(Link) and Karnataka(11.2 MW) for Rs. 30 Crore to Goyal MG Gases(Link).
  • The Central Electricity Regulatory Commision(CERC) directed wind farms to forecast power generation or face fines(Link). The wind generators promptly take CERC to court over the directive(Link).
  • The lack of transmission infrastructure in Tamil Nadu was once again exposed, with the textile industry reporting that about 30% of the wind power generation capacity were backed down and power not evacuated during peak wind season(Link).
  • Gujarat government announced  a new wind energy policy, fixing new procurement tariff and exempting wind energy from electricity duty(Link).

August 2013

  • In another high profit exit from the wind sector, the TVS Group announced its plans to sell its wind assets(Link).
  • Reliance Capital announced that it is investing Rs. 100 Crore in Wind Power Joint venture with China’s Ming Yang Wind Power Group(Link).
  • Morgan Stanley-backed Continuum Wind Energy acquired 180 MW wind farms(Link).

September 2013

  • In September 2013, the Indian currency fell drastically to close to Rs. 70 against the US Dollar. The current drop threatened the recovery of the Wind industry(Link).

Quarter 4

October 2013

  • DLF completed the sale process of 33MW wind turbines project in Rajasthan to Violet Green Power for Rs 67.44 crore(Link).
  • Simran Wind Project Pvt., an Indian wind farm developer backed by the International Finance Corp., halted plans to expand this financial year, saying government subsidies arrived too late(Link).
  • Nagarjuna Agrichem, an Indian agrochemicals maker, sold off its entire wind power business to an undisclosed investor for Rs30 crore (~$5 million) as part of its strategy to consolidate on core business(Link).
  • Siva’s wind turbine maker, WinWinD, filed for bankruptcy(Link).
  • The Karnataka Electricity Regulatory Commission (KERC) raised the rate of wind power generation to 4.20 per unit from Rs. 3.70 per unit earlier in a tariff order(Link).
  • Morgan Stanley-backed Continuum Wind Energy announced its aim to build 1,360 megawatts of wind farms by 2017, almost all of that on its own, abandoning an industry practice of hiring turbine makers to execute projects on a turnkey basis(Link).

November 2013

  • China Ming Yang wind turbines cleared for sale in India(Link). Subsequently, the Chinese turbine manufacturer announces its first order in India – a 150 MW in Maharashtra(Link).
  • Bharat Light and Power and IBM Collaborate to boost wind farm output by better managing wind-farm data(Link).

December 2013

  • As the calendar year comes to a close, TATA Power highlighted the big story of the year for the sector – sale of wind assets due to financial stress in the sector and/or rationalization of assets(Link).
  • India Wind Power Association moved Tribunal challenging Tamil Nadu’s move to buy thermal power(Link). 

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