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New panchayat tax on wind turbines in Tamil Nadu may make wind power costlier by Rs 8-10 lakh per MW

According to reports, the Tirunelveli-Kanyakumari belt of wind mills in Tamil Nadu, the densest and oldest in the country and a showpiece of how wind energy can transform a rural landscape, has become an unlikely zone of conflict. An increasingly self-assertive local administration wants to tax wind mills in its vicinity and wind energy companies are opposing such a move. The episode has also triggered questions about whether the two decade-long proliferation of wind mills on this stretch has provided for inclusive growth.

The conflict started this May when the Tirunelveli collector R Selvaraj passed an order to levy a slew of taxes and fees on wind turbine generators justifying it on the grounds that this would empower local people and make panchayats more viable. Theni district has since followed the example. But the Indian Wind Turbine Manufacturers Association is aghast at what it says is a “rude shock” . The association has sent a petition to Chief Minister J Jayalalithaa and obtained a court order staying the levies . The wind association’s secretarygeneral DV Giri reckons that the taxes will make a megawatt of wind power costlier by Rs 8-10 lakh. “This steep demand will push up the capital costs and impact the returns for the investor. The qualitative impact will be delays, bureaucratic holdups and an atmosphere of apprehension and doubt by investors .”

The association has also questioned whether collectorates have the power to frame such rules. The industry worries that other local bodies would follow suit. This could be the first major public blip for the Tirunelveli-Kanyakumari belt of wind mills which, until now, has been a star performer in India’s wind energy journey. The region took to windmills much earlier than the rest of the country, thanks to favourable wind conditions and the state’s early interest in tapping it. Today, the bulk of the over 6,500 megawatt of installed capacity of Tamil Nadu, roughly half of India’s capacity, comes from these two districts.

One comment

  1. Why this ‘kolaveri’ in TN on Wind? First Tangendco blames cartel of turbine manufacturer! Again it wants banking to be removed !! It also withdraws order on cross subsidizing charges !!! Finally this panchayat ruling !!!! This is in spite of Wind coming to the support of TN Grid at the most crucial times. I presume the manufacturers are doing a very bad job with decision makers.

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