Tamil Nadu Wind – A Victim Of Its Own Success?

Tamil Nadu Wind sector’s golden age has come to an end. At least it appears so going by the installation numbers for the current year and last year.  The sector added a little more than 6 GW during the decade 2002-03 to 2011-2012 and ended the period by adding an average of 1 GW per year in 2010-11 and 2011-12. As of October 31, 2013, Tamil Nadu’s installed wind capacity was 7192 MW and it constituted about 36% of the total wind capacity in the country (19,933 MW).  In contrast, a meager 175 MW was added in 2012-13 and about 150 MW is expected to be added during 2013-14.
Annual Installations
(Source: Central Electricity Authority and RESolve Analysis)
The end of this growth in 2011-12 coincided with the withdrawal of Acceleration Depreciation(AD) benefits and the Generation Based Incentives(GBI) by March 2012. While the GBI has been restored, AD is not available for the wind sector.
While the issues related to AD and GBI are common across the country, two factors had an adverse impact on wind sector since 2011-12. According to K. Kasthoorirangaian, Chairman of the Indian Wind Power Association(IWPA), the first issue related to the pending payments for the wind power generators which lasted for almost a year at one point due to the abysmal financial situation of Tangedco. During the past one year, Tangedco has been successful in addressing this issue through a series of measures including retail electricity tariff increase.
The second is a bigger infrastructure issue. Mr. Kasthoorirangaian lamented that about 40% of the energy during the peak wind season was lost because of power evacuation issues. While the wind generation capacity had increased at a fast pace during the past decade, the evacuation infrastructure has not kept pace. Mr. Kasthoorirangaian said that the evacuation decreased from June to August 2013 compared to the same period last year despite grid connectivity. The charts below provide an idea of how much the sector was affected during the peak wind season.
Capacity and generation
(Source: SLDC and RESolve Analysis)
From the above chart, it can be seen that while the installed capacity increased during each month compared to the previous year, the power evacuated had dipped significantly during most the of the peak season.
The overall capacity utilization factor for the state naturally dipped, by more than 50% during some months(September) compared to the previous year.
wind PLF
(Source: SLDC and RESolve Analysis)
Seasonal drop in wind speeds could be a reason for lower PLF, but such a drastic drop has not been reported by any developer or third party weather monitoring firms.
The state government has acknowledged the problems related to transmission and had been working towards improving the evacuation infrastructure (read more here).
The IWPA also says that the wind farms are not given “must run” status by Tangedco, even though the Indian Electricity Grid Code 2003 mandates the “must run” status for all renewable energy projects except biomass. It also alleges that Tangedco is buying costlier thermal power from outside state even during peak wind season and backing down wind mills for 8-22 hours daily, calling it “infirm” power(read more here).
The Tamil Nadu state planning commission has set a target of an addition of 6000 MW of wind power in the state during the 12th Plan period(2012-17), whereas the Central Electricity Authority expects Tamil Nadu to add another 4339 MW of wind capacity during 2012-17. However, going by the current trends, these numbers look way too optimistic. During the first 2 years of the plan period(2012-14), only about 350 MW would have been added, and if Tamil Nadu has to achieve its goal of 6000 MW in 5 years, most of the installations will have to come in the next 3 years, which looks extremely unlikely at this stage.
The rapid generation capacity addition without a corresponding transmission capacity addition has ensured that the success of Tamil Nadu’s success in generation did not help the state benefit from the full wind potential in the state.
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