India - Wind energy sector hopes to power up on cheaper turbines

A report on the wind energy industry in India expects wind turbine prices to fall from Rs 5.35 crore a MW now to Rs 5 crore by 2010, and stabilise at that level.

In India, the report notes, turbine prices have always been lower than the global average, thanks to lower labour and production costs.

“The manufacturing industry,” says the report, “has not so far gained the full benefits from series production, especially due to the rapid upscaling of products. Neither has the full potential of the latest design optimisations been realised.” The report, titled “Indian wind energy outlook 2009” published by the Global Wind Energy Council (GWEC) and the Indian Wind Turbine Manufacturers Association (IWTMA), says that increasing the level of local manufacture of turbine components will bring down costs.

Global outlook:
Giving an international perspective, the report says that the capital cost of wind turbines has been falling over the past 20 years thanks to manufacturing techniques being optimised and due to economies of scale from mass production and automation.

While prices went up globally during 2006-08 due to higher raw material costs, shortages in the supply chain for components, the financial crisis reversed this trend. As financing for new projects became difficult, the backlogs in component supply eased.

Raw material prices also came down, further bringing down turbine prices. “As a result, since late 2008, global turbine prices have dropped by 18 per cent for turbines to be delivered in the first half of 2010,” the report says.

According to a press release from New Energy Finance, wind turbine prices, which account for 70-80 per cent of total installation costs of a wind farm, have dropped by 18 per cent for contracts signed in late 2008 and 2009 for delivery in the first half of 2010.

Turbine prices are most important factor affecting generation costs. A Wind Turbine Price Index, developed by New Energy Finance, which provides research on renewable energy sources, shows a slight recovery in pricing for contracts signed in 2009 for delivery in the second half of 2010. The GWEC-IWTMA report quotes this press release on the fall in wind turbines prices.

Policy initiatives needed:
Lack of a coherent national renewable energy policy in India has affected the sector. While State-level initiatives have helped drive the sector, the absence of a national policy hampers genuine progress. To boost investment in renewable energy, there is need for clear, stable and long-term support policies, according to the report.

As a first step, the report calls for a national renewable portfolio standard — which will mandate distribution utilities to buy a fixed percentage of the electricity they supply from green sources. Along with it, there has to be a market-based scheme for renewable energy certificates that can be traded.

Under the scheme, States will be encouraged to promote production of renewable power to exceed the national standard. They will be given certificates for this surplus which they can trade with States that fall short of their target. A national level feed-in tariff — a minimum guaranteed tariff — will also ensure uniform tariff incentives and provide stronger investor confidence, the report says.

The report calls for an updated wind resource map for the country — the earlier one estimated the potential at 48,561 MW. However, the masts are now much taller than before and improved technology helps harvest more wind for electricity generation. Experts in the sector believe that the potential will be as much as 100,000 MW.

For more information please contact Trevor Sievert at ts@windfair.net