Wind power industry seeks long-term credit

| | Updated on: Jan 13, 2014
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One of the issues that the recently launched national mission in wind power industry will consider is a plea by the industry to make sure that those who want to put up wind farms get access to credit — just long-term credit, not even at any lower rate of interest.

Towards this, the wind power industry has mooted the creation of a Rs 25,000-crore fund, which could perhaps be managed by the government-owned renewable energy finance company, IREDA, out of which loans could be given.

“Today, wind companies stand last in the queue for credit,” said Ramesh Kymal, a doyen of the wind power industry in India and the Chairman of the Indian Wind Turbine Manufacturers Association.

Long-term loans

The industry is not asking for any subsidised interest rates, but for more loan for the same amount of equity capital (or, “higher leverage”) and loans repayable over longer terms, say 10-15 years.

The association, along with the Wind Independent Power Producers Association and the Shakti Sustainable Energy Foundation, made a presentation at a meeting of all stakeholders held in Delhi on January 9.

Kymal said that while the specific recommendation for the creation of a fund to give loans out of it will be considered by the government, “everybody agreed that there is a need to do something” about giving the wind industry easier access to credit.

The manufacturing side of the industry is capable of producing machines worth 10,000 MW, but the market is for less than 2,000 MW.

In 2012-13, wind power installations fell to 1,700 MW from 3,200 MW in the previous year because the government withdrew two incentives — the ‘generation-based incentive’ and tax-saving ‘accelerated depreciation’ benefit.

Restoration of GBI

Compounding matters was the promise of the restoration of the GBI (generation-based incentive), which caused project developers to wait for it. This took time and the GBI was brought back only a few months ago. Wind farm projects were held back, while those investors who would have put up wind turbines for the ‘accelerated benefit’ depreciation, began looking at ‘solar’ as an alternative.

Due to this confusion and the anaemic economy, wind power installation in the current financial year too is not expected to exceed the previous year’s achievement of 1,700 MW by any significant margin.

However, industry insiders feel that the launch of a national mission for wind will help bring focus on the industry, providing it some warmth.

Published on January 13, 2014

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