Wind energy dropped 1,500 MW due to withdrawal of incentives

Association asks govt to restore generation-based incentives and accelerated depreciation for the industry

Wind power generation in the country dropped 1,500 MW last fiscal due to the removal of incentives given by the government, an industry body said.

Indian Wind Power Association (IWPA) has asked the government to restore generation-based incentives and accelerated depreciation for the industry, which witnessed a dip of 1,500 MW in generation during 2012-13.

Wind energy is the cheapest source of electricity in the country. The current installed capacity is 19,000 MW.

"The reason for dip in wind power production is due to removal of (GBI and AD) incentives, IWPA has urged the government to restore the accelerated depreciation (AD)," IWPA Chairman K Kasthurirangan said at a conference here.

AD is based on investment. If a company invests Rs 100 then Rs 80 it can take back as tax incentive. Under the scheme for wind power, a GBI (Generation Based Incentive) of 50 paise per unit of electricity fed into the grid is provided for a period not less than 4 years and a maximum period of 10 years.

"GBI was encouraging large scale Independent Power Producers and generation based finance and AD was for small investors," Kasthurirangan said.

He added that AD provides cheaper and non-polluting electricity with no annual escalations.

"We have been working with the Ministry of New and Renewable Energy for the past year on the issue (GBI and AD were discontinued last year) and now they are convinced that a generation loss of 1,500 MW was there," he said.

He added that reinstatement of GBI has been announced during the Budget 2013-14. Its form and structure is yet to be announced.

According to various reports these incentives were scrapped as many developers took incentives to save tax and after the completion of incentives either neglected or abandoned the wind farms altogether.