Generation-based sops announced for struggling wind power sector

Breathing life back into the subsidy starved wind energy sector, the government has approved the implementation of ‘generation-based incentive (GBI)’ that was announced in the budget this year.

After a hiatus of one and a half year without any subsidy or incentive scheme, the wind power sector would now be able to avail GBI with a retrospective effect. All the wind power projects launched after April 1, 2012 are eligible for GBI.

The government would pay the producers Rs0.50 for every unit of wind power generated. The maximum amount of incentive that could be availed has been increased to Rs 1 crore from Rs 62 lakh during 2011-12, a senior official at the ministry of new and renewable energy told ET. The time period for availing GBI is minimum 4 years and maximum 10 years of operations.

“This would straightway give benefit of Rs 38 lakh to all the wind power producers who started commissioning after April 2012,” said the official.

The wind sector has been struggling to perform and survive due to lack of any incentive for more than 16 months.

Capacity addition fell by half during last financial year from 3,000 mw in 2011-12 to 1,700 mw in 2012-13. In the first half of 2013-14, wind has been able to feed 512 mw against a target of 2,500 mw. The current installed capacity of wind power in India is 19,564 mw, fifth largest in the world.

Both GBI and accelerated depreciation (AD) schemes were discontinued in April last year. GBI, however, was reintroduced this year with a budget allocation of Rs 800 crore. Both MNRE and the industry have been urging the government to reinstate AD and provide clarity over GBI.

“The Cabinet has refused to restore AD citing procedural challenges,” said the official. AD is a tax benefit scheme, which could be availed by any one who sets up a wind farm irrespective of the power generation. Officials also said that the finance ministry had earlier rejected AD citing that it would lead to huge loss to exchequer. AD was in force for the wind industry from 2003 to 2012. Total 17,000 mw of wind power was added in the nation’s grid during this period.

Source: ET

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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