What explains investment-resource gap in wind power technology in India? Testing for the relevance of local factors

Abstract

Worldwide, a disparity in utilization of wind resource is observed. Often, regions endowed with higher wind potential tend to receive fewer investments than those with lower potential. This study is aimed at identifying factors that result in such a skewed diffusion of wind power technology (WPT). These factors are identified by conducting a case study for a State in India - Maharashtra. The State is chosen as there is no correlation between wind potential in a district and corresponding WPT installed capacity. Only five districts (out of nine districts endowed with significant wind potential) comprising less than 50 per cent of the potential contribute more than 90 per cent of the capacity. Accordingly, this paper is an enquiry into role of local factors influencing the adoption of WPT. Five factors are identified through semi-structured interviews with six firms contributing to over 50 per cent of the installed capacity of WPT in Maharashtra. Subsequently, validation of the factors is carried out through econometric analysis using the data for nine districts of the state for the period 2006-2013. Results show that four factors - namely, geographical, technological, societal, and bureaucratic influence the decision of firms to invest in WPT.