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Context
- New developments in wind energy sector in India, particularly in Tamil Nadu
Wind energy in Tamil Nadu
- TN has historically struggled to evacuate the huge amount of power generated by its wind farms.
- This happened because of its inability to predict wind-power generation in advance and contract coal power generation accordingly.
- However, TN has taken the lead in using good forecasting techniques since 2015.
- It has resulted in a steady rise in the amount of wind energy being evacuated.
Two conflicting developments
- A milestone for the wind energy sector in TN. On July 11, the state evacuated more than 5000 MW of wind power, replacing almost 1000 MW of thermal energy. On this day, wind energy accounted for almost a third of the state’s electricity demand.
- Bleak market sentiment. This year, India decided to go for auctions to discover energy tariffs, rather than feed-in tariffs fixed by regulatory commissions.
- This has resulted in record low prices of wind energy in the country.
- Many states are now refusing to sign Power Purchase Agreements at feed-in tariffs.
- Energy companies feel the low prices will cut into their profits.
- Auction by Tamil Nadu Electricity Regulatory Commission has resulted in even lower wind energy prices in the state.
- Other problems like arbitrary curtailment of wind power and backlogs in payment further erodes their faith in participating in the auctions at low margins.
Future prospects and way forward
- TN is expected to fully realise its renewable energy potential once the Raigarh-Pugalur green power transmission corridor is completed by 2019.
- In the context of the two conflicting developments mentioned above, TN has a unique opportunity at hand. It has successfully showcased the benefits of better planning and forecasting in integrating wind energy in its energy mix. It has the largest wind capacities in the country.
- The transitions may not be smooth, but, TN and other states need to ensure the balance for regulatory clarity and market stability and investor confidence.
- Most importantly TN must continue to build on its planning process for the sector.
