Indian wind additions may drop 27% y/y in FY 2017 - ICRA

India may install about 2,500 MW of fresh wind power capacity in the fiscal year through March 2017, down from the record 3,415 MW in fiscal 2015/16, credit rating agency ICRA Ltd said Monday.

That forecast differs from the expectation of certain sector players. For example, yesterday Indian wind turbine maker Suzlon (BOM:532667) said installations in the country are seen to grow by over 30% in fiscal 2016/17 on the previous year's 3.4 GW.

According to ICRA’s report, the substantial reduction in the preferential tariff for new wind power projects in the state of Madhya Pradesh, coupled with the slowdown in the signing of power purchase agreements (PPAs) and delays in payments by a state-owned utility in Maharashtra, will be among the main factors to affect the domestic wind industry in the near term.

Furthermore, the expiry of generation-based incentive benefit at end-March 2017 and a reduction in the accelerated depreciation benefit from 80% to 40% from fiscal 2018 onwards are likely to affect future capacity additions.

Among other regulatory shifts to pose serious challenges for the wind sector in India is the proposed implementation of a forecasting and scheduling framework in some of the key wind states. All of the above-mentioned factors combined are bound to slow down the impressive growth rate the country registered last year, when it commissioned 48% more wind parks as compared to the 2,308 MW in fiscal 2014/15.

ICRA’s long-term wind forecast is still optimistic, thanks to strong demand, favorable government support, large untapped wind power potential, fairly attractive feed-in-tariffs (FiTs) and relatively lower execution risks.

Choose your newsletter by Renewables Now. Join for free!