Headwinds to affect wind power capacity addition
KOLKATA: Headwinds in Madhya Pradesh and Maharashtra is likely to affect wind power capacity addition in FY2017 although long term demand potential remains intact, said ICRA in a recent report. In ICRA's view, wind energy sector is facing headwinds in near term due to substantial reduction in preferential tariff from, Rs 5.92 per unit to Rs 4.78 per unit, for new projects in Madhya Pradesh and slowdown in signing of fresh power purchase agreements as well as delays in payments by state-owned utilities in Maharashtra. "These headwinds could lead to decline in fresh capacity addition to about 2500 MW in the energy sector during FY2017. Further, the expiry of generation based incentive from March 31, 2017 and reduction in accelerated depreciation benefit from 80 per cent to 40 per cent could also impact wind power capacity addition from FY2018 onwards. Nevertheless, we believe that the long-term outlook for wind energy remains strong given the favourable government support, large untapped wind power potential, fairly attractive feed-in tariffs and relatively lower execution risks" said Sabyasachi Majumdar, senior vice president at ICRA Ratings. In FY2016, the wind power sector witnessed a record capacity addition of 3415 MW, a 48 per cent increase over capacity additions of 2308 MW achieved during FY2015. A major portion of this capacity addition was accounted for by new projects in MP because the state offered attractive tariff. ICRA notes that incremental wind-based energy capacity requirement by FY2022 is estimated at about 35 GW as against the current installed capacity of 26.8 GW. This assumes...30-05-2016
