NDRC: National Development and Reform Commission set up in year 2003 with clear objectives of promoting wind power in China.
The main elements for wind power concession projects are:
Each project should be above 50 MW ideally 100 MW. Well similar scale of projects or may be smaller capacity of around 25 MW and more can be thought of in India for wind power development.
Project investors are selected by public bidding, with lowest feed-in tariff (Price per KWh) obtaining the contract. This is something interesting but might take little bit of more time to come to India.
Dynamic pricing: though the length of the contract runs for 25 years the feed-in tariffs decided/bided are only for 30,000 Full load hours of operation. 30,000 full load hours with PLF of 25% comes to around total of 1,20,000 hours that is approximately 14.5 years with 95% availability of WTG. After this initial concession period the tariffs would be reduced to the average for the power market at that time. This is what is known as business acumen. While meeting the need of the day and making the project economically viable and also ensuring the long term interest of the country. Probably it makes more sense to have the people responsible for policy making to have basic idea of Financial Modeling.
All electricity purchased by the provisional power grid company.
70% of the wind turbine components should be made in China.
Infrastructure Development: local authorities are responsible for building access roads to the wind farm sub-station. This is the area where the communist ideology again scores better than democracy where in the total wind power industry development could be hijacked by local unrest.
Grid companies are responsible for transmission lines to the sub station.
Contemporary to developments: observing that there was excessive undercutting by local players, changes were made in bidding guidelines in the 5th round of tendering in year 2007. The weight age of the bidding price is around 25% and those bidding price closest to the average bidding price score the highest. The alacrity with which the Chinese government and policy making reacts to the developments in business is just remarkable.
Manufacturer, developer agreements were made simpler allowing one manufacturer to supply to more than one developer.
Having said all these, not only in the wind industry in India but probably in all the areas which are affected by policy making, where changes are happening at much faster rate there is dieing need for acute business acumen when it comes to giving long term direction and deciding the major guidelines for the development.
Hope we learn from the examples.
source: GWEC Report, New Energy Finance
