Winds of Change
Mr. David Rasquinha, Managing Director

Energy and climate are inextricably linked with any change in energy sector activity seemingly affecting the latter. The irony is that the energy so used, is neither adequate to satiate the demands of the global populace nor is it helping the planet to remain healthy and inhabitable for future generations. Although, there is no single remedy to this issue, a series of measures could be undertaken by various stakeholders in addressing challenges arising out of climate change and thereby help in sustainable development.

One of the most critical measures of climate change mitigation is enhancing the usage of clean and renewable sources for meeting the ever increasing global energy demand.

According to the International Energy Outlook, primary energy consumption in India is projected to increase by over 1.5 times by 2030, from 20.3 Quadrillion Btu in 2007 to 34.1 Quadrillion Btu in 2030, thereby growing at an average of 2.6% per year. Given this level of increase, it is important for India to reduce its dependence on CO2 emitting sources (primarily fossil fuels – oil, coal and natural gas) and enhance its production of alternative sources of energy which promote a greener economy. The only way to do so is to promote production and use of renewable sources of energy such as hydro, wind, solar and biomass. This would not just reduce the India’s carbon footprints but would also have an added benefit of improving the country’s trade deficit, as nearly three-fourth of India’s oil demand is met through imports.

India, home to a sixth of the world's population, accounts for only 6% of global energy use at present, with one in five Indians are yet to gain access. The average energy consumption per person is one-sixth of the global average. The fact remains that, India’s reliance on coal could not be forgone in the distant future, and hence the need is to have a fair fusion of conventional and renewable energy. India needs to make a quantum jump in generation of energy through renewable energy resources.


Given renewed impetus in the last few years, the renewable energy sector in India has emerged as a significant player in the grid connected power generation capacity of the country. India has an estimated renewable energy potential of about 852 GW from commercially exploitable sources viz. Wind – 102 GW (at 80 metre mast height) and 750 GW solar power. The Government has revised its target of renewable energy capacity to 175 GW by end of 2022 (100 GW for solar, 60 GW for wind, amongst others) making it the largest expansion in the world and providing plenty of opportunities for investors. Currently, the total installed capacity in India has reached to 310 GW with generation mix of Thermal (69.4%), Renewable (14.8%), Hydro (13.9%) and Nuclear (1.9%) as on Dec 2016. The UN Environment Program’s (UNEP) ‘Global Trends in Renewable Energy Investment 2016’ report ranks India among the top ten countries in the world investing in renewable energy. According to EY Renewable Energy Index 2016, India was ranked 3rd after USA and China, but ahead of developing countries like Chile, Mexico, Brazil, South Africa, and developed countries like Germany, France and Canada (all these are amongst top 10). The Government is also committed to Clean Energy and is driving efforts to achieve 40% power installed capacity from non-fossil-fuel-based energy resources and reducing emissions by 33-35% of its GDP by 2030.


Wind energy today occupies a prominent position in the overall scheme of things in the power sector in India. From a technology that was regarded as fringe technology few years back, it has moved to center stage as an option offering near grid parity, which possibly will become. Today, wind is placed in a much better situation and is already fairly well established, while solar is in the process of catching up. However, the combination of wind and solar together is expected to play a pivotal role.

It is estimated that with the current level of technology, the ‘on-shore’ potential for utilization of wind energy for electricity generation is of the order of 65,000 MW. At nearly 27 GW of installed capacity, India is already the world’s fourth biggest producer of wind-based electricity, after China, the United States and Germany. Latest outlook from Global Wind Energy Council shows that India would have close to 45 GW of installed wind energy by the year 2020 even in the most modest of growth scenarios. If pushed aggressively, it can go up to 67 GW by 2020. That means, India’s target of generating about 60 GW of electricity through wind energy can be realized two years in advance.

In 2015, the National Institute of Wind Energy (NIWE) in Chennai revised the estimate of wind power potential in the country. It was earlier estimated to be just over 102 GW, if tapped at a height of 80 metres from the ground. In that case, according to NIWE the potential for wind energy in India shoots up almost three times, reaching 302 GW. What’s remarkable is that more than half of this potential, 153 GW, is located on wastelands. Viewed from this context, India has currently utilized just around 9% of its wind energy potential.



Wind Power Capacity (MW)


upto 31.12.2016

upto 31.12.2015

upto 31.12.2014

upto 31.12.2013

upto 31.12.2012

upto 31.12.2011


















































Tamil Nadu




























Wind energy has been the predominant contributor to the growth of world renewable energy. India’s wind capacity has grown from nearly 12 GW in 2009-10 to more than 28 GW now, having a share of close to 60%. Almost 10 GW of this capacity addition has come in the last four years. India is the fourth largest wind power producer in the world, after China, USA and Germany.

Against the target of 4000 MW for the year 2016-17, a wind power capacity of 1923 MW has been added up to December, 2016. The state of Tamil Nadu is the highest contributor to the wind power installed capacity at 7694 MW, followed by Maharashtra at 4666 MW. On an average, the installed wind power capacity has increased at 12% annually from 2012-13 to 2015-16. Highest ever wind power capacity addition of 3300 MW in 2015-16.


In the absence or rather paucity of products (under HS 6-digit level) that can be classified as being exclusively serving the renewable energy sector (i.e. single use exclusive items), the identification of goods and components used in renewable energy supply has been based on a study by the International Centre for Trade and Sustainable Development (ICTSD). There are 53 such products identified at HS 6-digit level of which 27 are related to wind components. The global exports for components of renewable energy stood at US$ 306 billion in 2015, with exports being US$ 149.3 billion (components of solar), US$ 103.8 billion (components of wind) and US$ 52.8 billion (components of biomass).

India has a strong manufacturing base of wind power equipment in the country. Presently, there are 20 approved manufacturers with 53 models of wind turbines in the country up to a capacity of 3.00 MW single turbines. Wind turbines being manufactured in India are of international quality standards and cost-wise amongst the lowest in the world being exported to Europe, USA and other countries.

The Indian exports for components of renewable energy stood at US$ 3.3 billion (1.1% of global exports) in 2015, with exports being US$ 0.97 billion, US$ 1.7 billion and US$ 0.65 billion for components of solar energy, wind energy and biomass energy, respectively. Hence share of wind energy components from India stood at 1.7%. The top 10 wind components constitutes around 60% (~ US$ 1.1 bn) of total India’s wind component exports (US$ 1.72 bn). The key exports being - Towers and lattice masts, of iron or steel; Liquid dielectric transformers, having a power handling capacity <= 650 Kva; Liquid dielectric transformers, having a power handling capacity > 10.000 kVA. India ranks 16th in wind component exports, with leaders being China (15.7%), Germany (13.3%), USA (9.1%), Japan (6.6%), and Denmark (5.1%).



Indias Exports to World

Indias Share in World Exports


Commodity Description









Towers and lattice masts, of iron or steel









Liquid dielectric transformers, having a power handling capacity <= 650 kVA









Liquid dielectric transformers, having a power handling capacity > 10.000 kVA









Tapered roller bearings, incl. cone and tapered roller assemblies









Liquid dielectric transformers, having a power handling capacity > 650 kVA but <= 10.000 kVA









Electricity supply or production meters, incl. calibrating meters therefor









Roller bearings, incl. combined ball-roller bearings (excluding ball bearings, tapered roller bearings, incl. cone and tapered roller assemblies, spherical roller bearings, needle and cylindrical roller bearings)









Transformers having a power handling capacity > 16 kVA but <= 500 kVA (excluding liquid dielectric transformers)









AC generators "alternators", of an output > 750 kVA









AC generators "alternators", of an output <= 75 kVA

















Within India’s wind power industry there are handful of domestic firms that own the technology rights and are, therefore, able to export their machines. These include Kenersys, the former German manufacture RBSconsult bought by Indian industrial conglomerate Kalyani Group, RRB Energy, which manufactures turbines from 600kW to 1.8MW, engineering firm Shriram EPC, Southern Wind Farms, and Pioneer.

The wind power equipment industry in India is largely geared to smaller capacity wind turbines, typically 250kW to 1.8MW. While demand for larger machines is being met by Suzlon, many Indian companies focus on finding export markets for smaller turbines, such as community wind farms in the US that need turbines in the 250kW to 750kW range. Encouraging more component manufacturing is one of several critical areas identified by IWTMA for improvement in the industry. Ramping up domestic component manufacture would reduce reliance on imports and drive down production costs, positioning India as a source of competitively priced generators and supplies.

If India is to develop its own capacity, let alone pursue export opportunities, it must establish an environmental job market that is sufficient to keep pace with the growing wind power industry. India needs more trained engineers to build farms and carry out operations and maintenance, but skilled production engineers and technicians are also needed to fortify the supply chain. Over the next few years, many of India’s wind farms will be liable for repowering — dismantling older turbines for replacement with larger, more modern machines. A potential export opportunity could be to recondition these older turbines and supply them to emerging wind power markets, at reduced costs and warranties. Developing economies, may be at the same time be interested in competitively priced smaller capacity turbines. Simultaneously, India can leverage its numerous trade links and agreements to supply many of these nations.


The government has proposed to end generation-based incentives (GBI) for independent power producers (IPPs) and reduce the accelerated depreciation (AD) benefits from 80%. Lack of consistency in policy significantly hampers investment prospects.

According to Indian Wind Turbine Manufacturers Association (IWTMA), the wind manufacturing industry had the capacity to produce equipment for 10 GW of generation, but domestic demand was only about 3 GW. “In the absence of proper atmosphere for export, our potential is getting wasted. The government needs to create the platform to enable the industry to export.

A third problem which may come by way of GST which, when implemented, could possibly push up costs for both wind and solar project developers as some tax exemptions may likely go away. Taken together, these may hurt the rate of return for investors and deter new investments.

The reduction in tax sops, together with hike in duties and taxes can have an adverse impact on the equipment manufacturers and wind installations.

Logistics is another challenge. As compared to the international logistics network, India lags in various criteria leading to an increase in operational cost, more investment of time and lack of certainty in profit making. This is reflected in India’s low ranking of 35 in the World Bank’s Logistics Performance Index 2016. (on the positive side, the ranking has improved significantly from 54th in 2014).

While India may gain to some extent in terms labour arbitrage, it holds the 45th position in terms of Gross Expenditure on Research and Development globally.


Debt makes up the majority of the investment going into many utility-scale renewable energy projects, either at the project level in the form of non-recourse loans, bonds or leasing; or at the corporate level in the form of borrowings by the utility or company that is developing the project. Bonds have been an alternative to conventional bank project finance for many years.

Apart from commercial banks and bond issues, the other major source of debt for renewable power assets is borrowing directly from the world’s array of national and multilateral development banks. According to United Nations Environment Program, between 2007 and 2014, the development bank most active in the sector was KfW of Germany, which provided US$ 28.3 billion of finance, followed by the European Investment Bank (US$ 11.7 billion), the World Bank Group (US$ 9.4 billion), Brazil’s BNDES (US$ 6.3 billion) and China Development Bank (US$ 6 billion).

As far as rural households are concerned they lack upfront debt financing options and have limited access to financial institutions and products, posing challenges to increasing the penetration of off-grid solutions. At the same time, on-grid solutions face the challenge of a viable power purchaser, as bankrupt discoms cannot take on the counter party risk. To ensure continued renewable energy development, the Government has focused on minimizing the cost to consumers by bundling on-grid renewable energy with fossil fuel power and by allowing the central power producer (like NTPC Ltd), which has a strong balance sheet, to take on the counter party risk. While this approach is suitable for the short term, it will not be feasible over the medium to long term as discoms must become profitable enough to take on the counter party risk themselves.

Wind in India

Till date, most of the wind energy projects in India have been financed with recourse to the parent company's balance sheet and/or promoter's guarantees. Bankers have been wary of extending project financing to these projects due to lack of region specific performance data, risk related to variability of wind patterns and weak health of discoms. The private equity (PE) route has also been a key source of funding for the wind sector in India. PE investors have evinced significant interest in the recent past. Few companies such as Ostro energy (Funded by Actis Llp), Green Infra (Sembcorp), Renew Wind Power (Goldman Sachs Group Inc) and Mytrah Energy (Funded by Merrill Lynch and Apollo Global Management) are backed by the global private equity funds.

Green Bonds are also an important source of funding. However, the exact figures dedicated to wind per se could not be sourced. During the period 2012 to 2016, the total amount of green bond issuance touched US$ 174 bn, which was being utilised for various clean energy projects.

Details of select issuances of Green Bonds in India are:-

Exim Bank: Exim Bank successfully launched a 5 year Reg S Green Bond issue of US$ 500 mn. This was the 1st ever USD-denominated Green bond offering out of India - 1st benchmark-sized Green bond out of Asia in 2015 - and the 3rd ever Green bond issuance out of Asia. This attracted subscription of around 3.2 times the issue size, led by strong demand, across 140 accounts, with significant participation from green investors and real money accounts, upsized from US$ 250 mn. Majority (58%) participation was from fund managers, while banks (20%), sovereign wealth funds/insurance companies (18%) were the other major investor classes. The issue was distributed 60% to Asian investors, 30% to EMEA and balance to offshore US investors. Exim Bank is using the net proceeds from the sale of the notes to fund Eligible Green Projects in countries including Bangladesh and Sri Lanka.

IDBI Bank: IDBI Bank has raised US$350m 5-year bonds, priced at Treasuries plus 255bp, with issue receiving an oversubscription of three times i.e. around US$1bn. Maximum investment came from Asia at 82% of the book and rest from Europe at 18%. India may also utilize the huge assistance offered by the international community including major funding agencies in the form of climate finance and technical know-how and should mobilize this fund to fast tract the process of achieving energy security for its citizens.

Yes Bank: Yes Bank came out with first green bond issuance in India in February 2015, which was a Rs 1000 crore 10-year issue. The issue was oversubscribed almost twice and the issue proceeds were to be utilised towards funding renewable energy projects such as solar, wind and biomass projects. Further Yes Bank came out with another issue of Green Bonds in August 2015, which was a Rs 315 core 10-year issue. The entire issue was subscribed by the International Finance Corporation.

CLP India: came out with an issue of green bonds, the first from an Indian corporate issuer. CLP India raised Rs 600 crore. The bonds have been offered at a coupon of 9.15 per cent per annum, in three series of equal amounts and will mature every April in 2018, 2019 and 2020.

Facilitating Access to Capital

A recent study conducted by the Climate Policy Initiative finds that limited availability of local debt is the biggest barrier to financing renewable energy projects in India. This manifests itself through less favourable lending terms such as high cost, short tenor and variable rates. It raises the cost of renewable energy in the country by 24%-32% compared with similar projects in the United States. Access to debt finance can be particularly difficult for small-scale projects. For filling the gap in affordable debt financing, longer loan tenors, lower interest rates or extended grace periods, can play an important role.

The case of IRENA/Abu Dhabi Fund for Development Project Facility with respect to long term concessional loans is exemplary as it offers loans with a tenor of up to 20 years, a five-year grace period and interest rates of 1%-2% to cover 50% of total project cost. As far as concessional or long-term finance is considered, Rural Electrification Corporation in India now extends loans to renewable energy projects at 75 basis points below that to comparable conventional generation projects.

On-lending, also known as financial intermediary lending, can also increase the availability of local debt, improve access to local financing and help build local lending capacity. Many international financial institutions use their high credit quality and market access to borrow debt at low rates and on-lend them via credit lines to a government or other institution. This reduces the local banks’ risk, making them more willing to lend, and improves the overall effectiveness of the investment.

Exim Bank has availed a credit line from the European Investment Bank for supporting projects that contribute to climate change mitigation while also extending lines ourselves to other developing countries to fund such projects in their countries.



Renewable energy has been re-classified as ‘white category.’ Previously, this sector was under ‘green category’ and the re-classification will enable ease of doing business as setting up of solar and wind power plants will be exempt from seeking environmental clearances from Ministry and consent from State Pollution Control Boards. To accelerate growth in the sector, the government, in January 2015, announced a separate Wind Mission under the National Action Plan on Climate Change (NAPCC).

The government has also announced incentives for the industry to ‘repower’ their existing wind turbines. The Policy for Repowering of the Wind Power Projects has been released on 5th August, 2016 to promote optimum utilization of wind energy resources by creating facilitative framework for repowering. Most of the wind mills in the country are of low capacities and are harnessing energy that is far less than the potential. As part of the incentive, the companies would get assistance from the government to replace the existing turbines with those of higher capacities.

India’s 7,600 km long coastline spurred interest in offshore wind resources, and the government is now defining a roadmap for further development for offshore wind development. To further boost this segment, the National Off-Shore Wind Energy Policy 2015 was announced to facilitate offshore wind farms in the territorial waters of India. Gujarat and Tamil Nadu’s coastlines are expected to have the most conducive environment for harnessing offshore wind energy, harbouring an estimated potential capacity of 106,000MW and 60,000 MW, respectively. This is an indicator of the huge growth potential of wind energy.


India has established several finance policy mechanisms for supporting development of renewable energy project:

Priority sector lending: In 2015, the Reserve Bank of India introduced renewable energy into the priority sector lending category, which incentivize banks to lend to this segment.

National Clean Energy Fund: The pool of money is collected by a clean energy tax on coal to support environmental and renewable energy projects. It is aimed at funding research and innovative projects in clean energy technologies.

Green bond issuance guidelines: The SEBI views the green bond market as a key tool to help raise the finance needed to meet India’s ambitious targets. India entered the green bond market in 2015, issuing US$ 1.1 billion in green bonds from a number of sources, including Exim Bank.

Reverse Auction: In February 2017 reverse auction1 was introduced for the first time in wind power as prices crashed to Rs. 3.46 a kWhr in the country’s first ever auction of wind capacity. The least wind tariff was Rs.4.16 in Tamil Nadu2


There is little doubt that there a rising sense of environmentalism in people now, and they are more conscious about the different kinds of environmental hazards that could affect our future. This has led to cost savings and shift towards sustainable living. Green power has now assumed centerstage as a way to continue progress through clean technology, and wind energy will be playing a pivotal role in this change. India is the cheapest country in the world by project cost and Indian wind energy goods are largely being accepted abroad. The opportunities for export hence remains enormous, and with the right transfer of technology exports of wind components may see further rise.

(This blog is an extract from Mr. David Rasquinha’s speech at Windergy India 2017, an annual conference and exhibition on Wind Energy, held on April 25-27, 2017 in New Delhi.)

1. A reverse auction is a type of auction in which the roles of buyer and seller are reversed. In an ordinary auction (also known as a 'forward auction'), buyers compete to obtain goods or services by offering increasingly higher prices. In a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid each other.

2.Four companies, Mytrah Energy, Green Infra, Inox and Ostro Energy, have won rights to set up 250-MW wind projects each and sell energy to Power Trading Corporation, at a price of Rs. 3.46 a kWhr. It is understood that Mytrah and Green Infra would set up their projects in Tamil Nadu; the other two will go to Gujarat. Mytrah Energy is an UK-based, AIM-listed, India-focused energy renewable energy company backed by Capital Group, Blackrock and Henderson funds. It is one of the larger wind power companies in the country with a portfolio of 1,000 MW. Green Infra, set up by IDFC’s private equity funds, is now 60 per cent owned by the Sembcorp group of Singapore. It has 500 MW of wind and solar assets in

3.India. Inox is a wind turbine manufacturer. Ostro Energy, backed by Actis, is another private equity-funded renewable energy company, which has 650 MW of operational wind and solar assets. The Adani group also quoted Rs.3.46, but lost out because it pressed the button late. ReNew Power, lost by one paise. The others in the race were Gamesa Renewable (which quoted Rs.3.68), Surya Vidyut (Rs.3.75), ReGen Powertech (Rs.3.85) and Leap Green Energy (Rs.3.92). Of these, Gamesa and ReGen are essentially wind turbine manufacturers and the others are energy companies.

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