Suzlon Energy Ltd to get boost from new government of India initiatives.

Suzlon Energy Limited (Rs.7.30), the Indian multinational wind turbine manufacturer based in Pune and the world’s fifth largest wind turbine supplier is likely to get huge boost to its bottomline, due to the recent developments.

In December 2020, Prime Minister Narendra Modi inaugurated a 30,000 MW hybrid renewable energy park close to the India-Pakistan border in Kutch, Gujarat touting it as the largest of among such projects in the world. 

In the same year, the Gujarat government allotted land to five developers for the hybrid renewable park — Adani Green Energy Limited was allotted 19,000 hectares, Sarjan Realities Limited (Suzlon Energy Ltd) was allotted 9,500 hectares, NTPC was allotted 9,500 hectares, Gujarat Industries Power Company Limited was allotted 4,750 hectares and Gujarat State Electricity Corporation was allotted 6,650 hectares.

Noticeably, the Gujarat government had allotted the land to Suzlon Energy Ltd  in 2015-16 to install 11 windmills in Sangnara. Subsequently, 6 (six) windmills were installed at different locations and the foundation for 1 (one) more was laid at Vadvalu Talav.

Subsequently, more than 40 more windmills were approved by the local administration for ‘green power’.

In another interesting development, according to a report by Reportlinker.com the Global Wind Turbine Market size was estimated at $ 88.46 Billion in 2020 and expected to reach $ 98.42 Billion in 2021, at a Compound Annual Growth Rate (CAGR) 11.59% to reach $ 170.

Also, according to an analysis, by BusinessWire, amid the COVID-19 crisis, the global market for Wind Power estimated at 58.3 Thousand Megawatts in the year 2020, is projected to reach a revised size of 69.7 Thousand Megawatts by 2027, growing at a CAGR of 2.6% over the period 2020-2027.

The Wind Power market in the U.S. is estimated at 15.8 Thousand Megawatts in the year 2020. China, the world`s second largest economy, is forecast to reach a projected market size of 14 Thousand Megawatts by the year 2027 trailing a CAGR of 4.8% over the analysis period 2020 to 2027.

Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 0.6% and 1.9% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 1.2% CAGR.

Government of India gives the following incentives to the wind energy sector

💢Concession on import duty on specified wind turbine components.

💢10 year income tax holiday for wind power generation projects.

💢Concessional custom duty exemption on certain components of wind electric generators.

💢100% exemption from excise duty on certain wind turbine components.

💢REC Mechanism.

💢Waiver of Inter State Transmission System (ISTS) charges and losses for inter-state sale of solar and wind power for projects to be commissioned up to March, 2022.

💢Permitting Foreign Direct Investment (FDI) up to 100 percent under the automatic route.

💢Notification of standard bidding guidelines to enable distribution licensee to procure wind power at competitive rates in cost effective manner.

💢Declaration of trajectory for Renewable Purchase Obligation (RPO) up to the year 2022.

💢Implementation of Green Energy Corridor project to facilitate grid integration of large-scale renewable energy capacity addition.

💢Technical support including wind resource assessment and identification of potential sites through the National Institute of Wind Energy, Chennai.

💢IREDA finance scheme for wind power projects.

💢Special incentives provided for promotion of exports from India for various renewable energy technologies under renewable sector specific SEZ.

💢Feed-in-Tariff (FIT) scheme for wind projects upto 25 MW.

💢GBI scheme for grid interactive wind power projects commissioned before 31 March 2017.

Finance Ministry might once again start Accelerated Depreciation Scheme (Discontinued in 2017) to give a forward kick to the dwindling growth of wind energy sector.

In 2015, India announced an ambitious goal of installing 175 GW of renewable energy (RE) by December 2022. 

However, till date it accorded a somewhat modest target as the focus shifted to solar power.  

Over the last few years, policy missteps have meant achieving even this limited target will be difficult. Thie might force the government of India, to take immediate steps to boost growth.

India has a high wind energy potential — 302 GW at 100 metres hub height and 695 GW at 120 metres, which is commercially realisable. Nearly 97% of this potential is concentrated in seven states — Gujarat, Karnataka, Maharashtra, Andhra Pradesh, Tamil Nadu, Rajasthan and Madhya Pradesh.

The Parliamentary Standing Committee on Energy, noted that, year-on-year shortfall in achievement of targets may hamper the entire mission of achieving 175 GW (of renewables) by 2022, including 100GW of solar and 60GW of wind energy - the country still has a long way to go before achieving that mark.

To recapitulate, though the Union Budget 2021, announced by Finance Minister Nirmala Sitharaman on February 1, 2021, outlined reforms and initiatives towards boosting the non-conventional energy sector in India, it was skewed more towards Solar energy space.

Moreover, as a part of Paris Climate Agreement, India has committed to install forty percent of its electricity generation capacity from non-fossil fuels by 2030. 

For achieving this goal, India has set an ambitious target of setting up 1,75,000 MW of renewable energy capacity, including 1,00,000 MW of solar power, by 2022. Further, a target of 4,50,000 MW installed RE capacity by 2030 has also been fixed.

India's electricity demand could grow three-fold from 949 TWh (terawatt-hour) in 2015 to between 2,074-2,785 TWh by 2030, according to a 2018 report by Brookings India, a non-profit public policy organisation. 

Renewable energy generation must increase at least six-fold to meet Paris Agreement climate change goals, per the Global Energy Transformation: A Roadmap to 2050 report by the intergovernmental International Renewable Energy Agency. 

Repowering wind farms could be part of fulfilling India's commitment to obtain 40% of its installed capacity from non-fossil fuel sources by 2030 under the Paris Agreement, besides ensuring low carbon growth in the power sector.

Therefore, we can expect the ministry of New and Renewable Energy, government of India, to bring in some special waivers for the wind power sector, soon.