New Wind-Forecast Rule Will affect Profits- Goldman’s Renew

According to reports, the new forecasting rule for wind farms to predict output will lead to penalties that may wipe out profits in the industry, said Goldman Sachs Group Inc.’s ReNew Wind Power Pvt.

Wind power producers have warned against this new rule that is seen to be dampening interest in the sector. The provision for fines for not meeting forecasts is seen to be a bit harsh measure.

“The level of accuracy they’re asking for isn’t possible,” said Sumant Sinha, chief executive officer of ReNew, which is backed by a $385 million investment from Goldman Sachs. “Most people will end up paying very significant charges.”

As per the rule, wind power generators have to forecast their generation of the next day, every 15 minute with provision for penalties if the actual generation is 30 per cent more or less over the submitted forecast. The rule is applicable only for wind turbines installed after May 2010.

The Wind Independent Power Producers Association has already moved the Delhi High court against the CERC (Central Electricity Regulatory Commission) over the forecasting order.

However, the government does not seem to be in a relenting mood. Officials point out that the order was implemented only after delays giving sufficient time to the industry to prepare for it.

Forecasting of wind generation helps to stabilize the grid.

Wind farms of 10 megawatts or more will predict their generation for the following day every 15 minutes. Missing estimates by more than 30 percent will incur penalties.

Reference and further reading;

Businessweek

Read our article entitled ‘RWIPPA moves court over wind forecasting rule’