Wind power producers in India want to see distribution companies forced to put up letters of credit (L/Cs) to guarantee that electricity generators are paid in full and on time for the power they produce.

The industry also wants a more flexible approach to tariffs to ensure that sufficient new wind power plants are developed in the future.

L/Cs called for

"The government is thinking about asking utilities to issue an L/C guarantee to generators against which power shall be dispatched," a spokesman from the India Wind Power Association (IWPA) told the Wind Power Monthly journal.

"A better solution could be a revolving L/C, equivalent to two months generation dues, backed by an agreement between the state utility, the developer and a sovereign entity like the central bank," he added.

Fair tariffs needed

Other industry figures are calling on the government to specify the anticipated margin between the cost and tariff for power.

According to the secretary general of the Indian Wind Turbine Manufacturing Association, DV Giri, the government's insistence on tariff caps in recent licensing rounds has resulted in them being undersubscribed.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.