Wind industry charged up by revival prospects of generation-based incentive scheme

The wind power industry, which has been subdued in terms of capacity addition since the beginning of the year, is now charged up with the prospect of revival of the generation-based incentive scheme (GBI).

Thanks to the repeated public statements made by the Ministry for New and Renewable Energy, Dr Farooq Abdullah, that a new GBI scheme will be announced, there is a sense of renewed optimism in the industry.

“The scheme is being revived. We are working on it,” Mr Anil K Jain, Advisor, Planning Commission, told Business Line on Saturday.

The scheme will give the much-needed boost to the industry, says Madhusudhan Khemka, Chairman and Managing Director of Regen Powertech Ltd, a leading manufacturer of wind turbines.

The MNRE has recommended to the Ministry of Finance that the government should give wind power producers 80 paise per unit of electricity generated by windmills, without any per-MW ceiling, for the next 15,000 MW of installed capacity. This scheme is therefore better than the one that prevailed until March, where the government gave a GBI of 50 paise per unit, capped at Rs 62 lakh per MW of installed capacity.

On the basis of its discussions with MNRE officials, the wind industry is certain that the Ministry of Finance will approve the scheme.

But….

However, the only point of fret is whether the incentive will be applied prospectively, or retrospectively (i.e., from April).

If the scheme is only prospectively applied, then the 300-odd MW of capacity set up between April and now will be left out, which is not fair, says Ramesh Kymal, President of the Indian Wind Turbine Manufacturers’ Association and Chairman and Managing Director of Gamesa India Pvt Ltd.

Those who have put up capacities have done so on the basis of the belief they would also be eligible for GBI and banks have financed them on that basis, Kymal noted.

The industry seems less confident of restoration of the other sop that was removed from this year, viz., accelerated depreciation. (Under this scheme, those who put up wind turbines could charge 80 per cent depreciation of the value of the machines in their books for the purpose of computing taxable income.)

However, there are a few other things that the government could do to help, says Vineeth Vijayaraghavan, Founder-Editor of Panchabuta, an online cleantech industry newsletter.

“The government should provide an interest subvention to wind power developers but that should be linked to certain level of indigenisation, say 70 per cent, of the machines purchased,” Vineeth says.

Last year, India added 3,168 MW of wind power capacity, taking the total capacity across 17,000 MW. In the current year up to July, 540 MW have been added, but typically capacity additions would pick up steam in September. Industry observers such as Vineeth estimate that the capacity addition in 2012-13 would be around 2,300 MW—lower than last year, but still substantially higher than earlier estimates.

ramesh.m@thehindu.co.in