India has suffered a rough year in the wind energy sector due to the wind energy tariff determination mechanism, policy issues and flat power demand. New windmill installations fell a five year low from April 2017 to March 2018. The country saw an addition of 1,762 megawatts of capacity only compared to 5,400 megawatt which was a record high, according to the data from Indian Wind Turbine Manufacturers Association (IWTMA).
Current Wind capacity in India stands at 34,042 megawatts, which is half of the target 60,000 megawatt by 2022.
The problem started in June 2016, due to faulty implementation of major policies by the government the firms started bidding at competitive prices instead of letting a regulating body decide the tariffs. The auctions were still not very active and resulted in a slow addition in the capacity.
The state electricity utilities also threatened the wind power producers due to backtracking on power purchase agreements. The Generation based incentives schemes was also not clear enough, the firms were paid a certain amount for every unit that they generated. With the start of new financial year the generation based incentives were withdrawn and then a small amount was allocated, it was the biggest cause of slowdown in the wind industry.
Also the government was keen on solar power and that to forced the wind power installations to rethink as a record low price of Rs 2.43 per unit in December 2017, caste clouds of doubts over the long-term viability of the project.
The tough time has now passed and the policies are now clear. Maharashtra and Gujarat are already rolling out auctions and offers at both central and state levels. The Ministry of New and Renewable Energy has committed to auction 10,000 megawatt projects in 2018. The tariffs are also set at Rs 2.85 per unit.