'WIND'ING ENERGY

Global Wind Energy Council (GWEC) figures show that 2007 recorded an increase of installed capacity of 20 gigawatts (GW) taking the total installed wind energy capacity to 94 GW up from 74 GW in 2006.When the cost of oil and natural gas gets inflated, wind turbines seem to become a very attractive option to the Indian business.

The earliest historical reference that describes windmills used to power an organ in the 1st century, where windmills were used to grind flour. Later on, with the development of “water pumping windmills” allowing farming and ranching in vast areas of North America, they also helped contributing to the development of steam locomotives. After steam locomotives were understood and researched on (using coal to create thermal energy), windmills somehow, lost their existence in the process. But when Suzlon laid it’s foundation stone to generate wind power in India, the company earned the equivalent of $41.6 million on sales of $202.6 million, leading the charge in the Indian markets and expansively spreading to abroad.

With a Population of more than 110 crore, and the annual consumption of almost 4,60,000 Million Units (MU) of quantum power received on the consumers’ end in 2007, the energy sector definitely has a-lot to offer. And, in context of growth, if there is any energy sector that has grown five times its initial production in just 7 years it truly is the Wind Energy Sector.

More than the average wind strength months (May and June) allow immediate implementation of energy for air conditioning in India. However, in places like California and Texas, peak wind speeds may not coincide with peak power demand. Therefore before the set up of the plant the concept of ‘weather’ or not should be properly checked. However, India being an agrarian economy, the profits involved in the Wind Energy Sector can become dual in nature. In an agricultural set-up where the soil may or may not be productive, the land can contribute to provide, both agricultural benefits along with heavy energy outputs. Thus generating energy locally, also keeping up to gaining profits. Kamal Nath, Minister of Commerce and Industry, said, “India is ideally suited for wind energy. The cost of it works well and we have the manufacturing capability”.

Following Germany, India, Spain, US and Denmark currently produce 80 percent of the 14,000 MW that makes up the entire capacity of worldwide wind energy. With the current prices of crude oil as $124 per barrel, wind energy remains more cost effective. Presumably why China seems to have imposed a requirement that power companies need to generate a 5th of their electricity from renewable sources by 2020. This target calls for expanding wind power almost as much as nuclear energy over the next 15 years. India already leads china in wind power and is quickly building more turbines.

Electricity board owned by the State Government charge industrial users more than twice as much for each kilowatt-hour even though the customers pay the same in the US- and they still suffer blackouts, which is a pretty common phenomenon in the Northern India. However, In spite of producing only 3% of wind energy from all the electricity produced, the wind-farms are capable of producing uninterrupted energy till a smaller distance of radius.

Coming down to the economic feasibility of Wind Energy set-ups, wind and hydropower have a negligible fuel costs and relatively low maintenance costs. In economic terms, wind power has a marginal cost and high proportion of capital cost. The estimates average cost per unit incorporates the cost of construction of the turbine and transmission facilities, borrowed funds, return to investors (including cost of risk), estimated annual production, and other components, averaged over the projected useful life of the equipment, which maybe in excess of twenty years. Energy cost estimates are highly dependent on these assumptions so published cost figures can differ substantially. Existing generation capacity represents sunk costs and the decision to continue production will depend upon marginal costs going forward, not estimated average costs at project inception. For example, the estimated cost of new wind power capacity may be lower than for “new coal” (estimated average costs for a new generation capacity) but higher than for “old coal” (marginal cost of production for existing capacity). Therefore, the choice to increase the wind capacity will depend on factors including the profile of existing generation capacity.

This negotiation often focuses on striking a balance between competing issues and concerns, such as social equity and the environment. Federal agencies and state and local governments have powerful roles to play in the process of the set-up. However, the various determinants to profit making in this business are- advanced site planning, expedited judicial review, coordinated siting process, clear decision criteria, reasonable time frames and significant public involvement. Also, some regulations that need to be much kept in mind are Wind turbine size (including maximum rotor size, minimum and maximum height, tower height and base), Installation and design (including tower, rotor and electrical safety, utility notification, warning signs and tower access), Siting, (including setbacks from plant boundaries and neighboring facilities, aesthetic design with tubular or lattice towers, clearances from electrical lines), Nuisance concerns (such as noise regulations and television or radio interference) and Other regulations (such as insurance, public access to wind facilities, and repair, maintenance and decommissioning requirements).

Coming down to compare the thermal energy with wind energy as of now, out of the total 15.4 quadrillion Btus of electricity produced in the year 2006, 53% came from coal and only 8% came from wind energy plants in India. Moreover, Coal maybe the most polluting fossil fuel but it grows the fastest. Not to mention, wind energy costs marginally more per unit than conventional energy (Rs. 4-4.5crore per MW compared with thermal Rs. 3.1 crore per MW). But the point is what happens after the coal industry exhausts out of the fossil fuel, is dependency and that to on the Wind Industry, along with the other replenish able sources. Hence, maybe thermal energy plants are more profitable today but in times to come, Wind Energy Plants will turn out to be a long term profitable investment.

As of September 2007, the installed capacity of wind power in India was 7,660.2 MW, mainly spreading across Tamil Nadu (3457.5 MW), Maharashtra (1484.9 MW), Karnataka (849.4 MW), Rajasthan (469.9 MW), Gujrat (667.1 MW), Andhra Pradesh (121.8 MW), Madhya Pradesh (57.8 MW), Kerela (2 MW), West Bengal (1.6 MW), and other states (1.6 MW). The point is- as most investors move towards owning the power sectors, what completes the infrastructure page is whether the infrastructure owned for today is more important that for tomorrow or vice versa.

(Written when I was interning for Financial Express, Was to come on the infrastructure page)
dIKSHA gROVER