Govt plan to repower old wind power plants could attract Rs 40,000 crore investments

Source: Financial Express, 13 January 2023

The Ministry of New and Renewable Energy’s (MNRE) new draft policy for repowering old wind power plants will increase wind power generation in the country and this will kickstart investments worth Rs 40,000 crore over 3-5 years, said a CRISIL report. It said that the investment will rise by three times the average annual wind power capex seen in the past four fiscal years.

The ministry recently issued the revised draft of the National Repowering Policy for Wind Power Projects, 2022, as most of the old wind power projects with sub megawatt scale wind turbines are yet to be repowered. “This may lead to replacement of ~5 GW of old windmills with new wind power plants with 2x more generation ability,” said Ankit Hakhu, Director, CRISIL Ratings. “Their viability looks good because such projects can generate double-digit returns at tariffs of ~Rs 4 per unit for the incremental capacity,” he added.

Government started driving the wind power capacity additions in India over two decades ago with supportive policies of accelerated depreciation and feed-in tariff, and availability of sites with high generation potential. Total installed capacity almost tripled from ~13 gigawatt (GW) in 2010 to ~34 GW till March 2018, the report said, maintaining that these generated less per unit of capex compared with the newer technologies. These windmills operated at hub heights of 100 metres. However after 2018, wind capacity additions slowed to ~42 GW as of December 2022.

New windmills, now, can operate at hub heights over 150 metres and generate more electricity per unit of machine capex using turbines of over 3 MW capacity. This, the report said, can leverage high-generation-potential sites that currently have the older generation turbines. “The policy provides clarity on extending eligibility of older machines from 1 GW to 2 GW to be repowered, on sale of incremental generation under open access route to C&I customers, and aggregation of projects (helping pool contiguous land parcels/ projects),” said Varun Marwaha, Associate Director, CRISIL Ratings.

Further, capital expenditure per MW will be higher for repowering because developers investing in old wind sites would pay a premium and also incur dismantling expenses of Rs 80 lakh to Rs 1 crore per MW. While generation will increase by 200- 300 per cent, the projects may still need higher tariffs (~Rs 4 per unit) than the recently discovered bids of ~Rs 3 per unit to generate double-digit returns, the report added.

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