Wind energy cos seek deadline extension for project completion

Mumbai: Wind energy companies in India woefully behind their project timelines have sought a blanket extension for all ongoing and future projects, calling the current 18-month timeframe "unviable".
At a meeting between renewable energy companies and the Ministry of New and Renewable Energy (MNRE) in June, wind companies have requested the government to extend the deadline for project completion to at least 24 months, according to people who attended the meeting.

Projects of Adani Green, ReNew Power, Enel Green Power, Inox Wind, Mytrah, Ostro, Srijan, and Alfanar are currently stuck in the pipeline, according to industry insiders, who did not want to be named. These projects have been lagging behind even before Covid-related disruptions started affecting the work from March last year. Developers point to unsustainable tariffs and land acquisition issues as the main reasons for the lack of viability of these projects, especially so when the work needs to be completed in 18 months.

While the government has provided multiple extensions on a case-by-case basis for projects due to Covid-induced delays, most of these deadlines will end in the coming months.

Several projects bid out in Tranche 5 — totalling nearly 2.4 gigawatts — by Solar Energy Corporation of India (SECI), the nodal agency through which the renewable energy ministry conducts wind and solar auctions, have still not been commissioned and the rest have taken up to 20 months to complete the work, while the Tranche 6 projects belonging to Adani Green took more than 29 months, as per industry data accessed by ET. SECI recently began inviting interest for bids for the 11th tranche that will be tendered as soon as next week. None of Tranche 7 to 10 projects — involving players like ReNew, Adani and Enel — have been completed yet.

"Wind energy projects have been impossible to complete within the 18-month timeframe," said an executive from a wind energy company on the condition of anonymity. "We already have so many land issues that predate Covid, but the pandemic made matters worse. Although the MNRE has granted extensions because of delays, such a timeframe remains unsustainable moving forward too," the person added.

If they do not complete the projects within the timeframe, then SECI starts deducting from their performance bank guarantees, which are submitted by the winners of tenders within 30 days of SECI issuing the letter of intent. The bank guarantee is Rs 10 lakh per MW of the project. SECI penalises delays on a per-day basis for the first six months, and then starts reducing tariffs for the projects.

Over the past two years, wind tenders have been heavily under-subscribed because of these problems, despite being issued multiple times. SECI has started moving towards wind-solar hybrid projects in its stead, hoping that it would help the bidding process to pick up.

While government officials did not immediately respond positively to their concerns, they said that the matter would be taken up and discussed internally, said the industry insiders.

Even with extensions, tariffs in the Rs 2.70-3.00 per unit range are beginning to become infeasible as turbine prices have shot up, while wind energy production over the last year has been the worst in the last decade due to slower-than-usual wind speeds, another executive said,

"Financing is another issue. Banks are now saying that the risk exposure is quite high in the power sector, and if they have to lend, they'd rather do it for solar projects as they are seen as having better prospects in the longer run," the person added.