India may add 25 GB wind energy capacity by 2028

India’s wind energy sector is witnessing rapid advancement, catapulting it to the fourth rank globally with 42 GW capacity. With the aim of generating 140 GW by 2030, the government is taking necessary measures and substantial investments, highlighting the nation’s commitment towards harnessing wind energy for sustainable future.

Wind energy

India stands at the fourth position in the world in terms of wind power generation capacity, being behind only China, the US, and Germany, with capacities at 342 GW, 139 GW, and 64 gigawatts (GW) respectively. The country’s wind capacity stands at 42 GW, which equals around 10% of its total power demand and strives to provide electricity to about 100 million homes. To achieve this objective, India has a target of generating a minimum of 140 gigawatts of wind capacity by 2030. 

The journey of wind power in India started way back with a project by Maneklal Sankalchand Thacker and the Council for Scientific and Industrial Research (CSIR) in 1952. Much later in 1985, the first large-scale wind project was established in Veraval, Gujarat, which furthered R&D efforts in the area.

The government has taken many steps to support the wind energy industry. It has set a target to auction 50 GW of renewable projects every year, including 10 GW specifically for wind projects to revive wind capacity additions. During the fiscal year 2023, the government auctioned approximately 5 GW of wind projects, compared to only 3 GW auctioned in 2021 and 2022. Auctions of hybrid and storage-linked projects rose from 4 GW in 2021 and 2022 to nearly 18 GW in 2023 and 2024.

Support for the construction of transmission infrastructure to wind sites, improved financial profiles of wind original equipment manufacturers (OEMs), and recent feasible tariff bids have increased auctions of wind and hybrid projects. These factors have led to wind capacity expansion.

The importance of wind energy generation in India’s renewable energy mix has increased for grid balancing and providing an uninterrupted energy supply throughout the day, unlike solar energy, which is generated primarily during daylight hours.

With continuous government efforts, India is set to add 25 GW of wind energy capacity by 2028, requiring around Rs 2 lakh crore. This represents a 2.5 times increase from the 9 GW produced between the fiscal years of 2021 and 2024, according to CRISIL Ratings Limited, a subsidiary of CRISIL Limited, an S&P Global company.

The pace of wind capacity addition was at 3.0 GW per year between the fiscal years of 2014 and 2018, which however declined to 1.7 GW between the fiscal years of 2018 and 2023. The reason for the decline is associated with the lack of linked sites with high wind potential and less returns for developers after aggressive bidding. 

Ankit Hakhu, Director of CRISIL Ratings says “Hybrid and storage linked projects would push higher wind additions. Nearly 30-50% of the capacity of these projects will comprise wind power as these require developers to provide renewable power throughout the day, especially demand peaks during evening and night hours.”

Improved Transmission Connectivity and Financial Aspects

Improved transmission connectivity and strong financial aspects of wind OEMs have eased supply-side limitations. Government plans and efforts are expected to increase wind site capacity from 50 GW in December 2024 to approximately 75 GW by March 2025 and 100 GW by December 2027.

The credit profiles in the wind energy sector have improved due to equity financing and bidding on crucial projects. This improvement is evident in two major manufacturers, responsible for around 40% of the 3.3 GW capacity added in fiscal 2024. Their interest coverage ratio increased from less than 1 in fiscal 2020 to an estimated 2.7 in fiscal 2024, indicating reduced leverage and improved credit profiles.

“Average tariffs have stabilised around Rs 3.2 per unit in fiscals 2023 and 2024 and are expected to continue in fiscal 2025, vis-à-vis Rs 2.8 per unit over fiscals 2020-2022. These tariffs are expected to be viable and remunerative to developers at the expected project costs over the medium term.” Says Varun Marwaha, Associate Director, CRISIL Ratings. 

The above estimates are based on the expected progress on the construction of transmission infrastructure and resources’ prices, which could affect the projects’ costs and thereby impact the feasibility of current tariffs. 

The strong growth of India in wind power capacity highlights its emerging role in the global renewable energy sector and shows its commitment to sustainable development.   

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