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Unfriendly policy decisions hamper power generation efforts

According to reports, while the entire state is reeling under severe power crisis, there is much scope to setup wind and solar energy plants. However, lack of investor friendly measures and policy decisions continue to hamper efforts to bridge the gap between demand and supply.

Wind energy producers are no longer interested in setting up new mills in the state due to the huge backlog in paying off arrears and the low procurement price of wind energy. TNEB owes Rs3500cr to producers. The dues have accumulated over the past 16 months, said K Kasturirangan, chairman, Indian Wind Power Association.

Availability of huge wind corridors with good wind velocity has been attracting investors to Tamil Nadu for more than a decade. The state, with an installed capacity of 7,000 MW, has the highest number of windmills in the country. But of late, there has been a slowdown in investment in the wind energy sector in Tamil Nadu,” he said. While in 2011, windmills that could generate 1,000MW were in stalled in the state, in 2012, the state was able to attract investors to set up only 200MW.

Wind energy producers blame the shift in trend to policy decisions announced by the Centre in recent months. K Kasthurirangian, chairman, Indian Wind Power Association, says investment in 2011 upped wind power generation by 3,200MW across the country. In 2012, capacity was augmented by just about 207MW. The main reason for this decline has been the withdrawal of incentives, says Kasthurirangian.

The Centre has been giving 80 per cent accelerated depreciation to wind power producers. This would mean subsidies that allowed domestic firms to save costs incurred in the maintenance of windmills through tax savers and enabled them to invest in new windmills. Foreign firms were given a subsidy of 50p per unit produced, said Kasthurirangian. However, the Union government scrapped these incentives from April 1 last year.

Tamil Nadu used to buy private wind power at Rs3.39 per unit which has now increased to Rs 3.51, whereas Maharashtra pays Rs5.75 per unit. Producers have been demanding at least Rs 5 per unit, which the state has ignored. Kasthurirangian added that the wind power association is in talks with the ministry of new and renewable energy, the planning commission and the finance committee to facilitate policy changes that would encourage investors and increase power generation.

One comment

  1. Accelerated Depreciation shall not be a blanket right for the Wind project developer. They know that the cost of machine can be reduced and made as main stream investment line. Infact all renewable energy projects should avoid Accelerated Depreiciation concept, otherwise, we can not make the equipment maker to reduce the price and also make the profit makers to pay the tax for the nations growth. Why are we crying to pay taxes and why look for Accelerated Depreciation to avoid paying tax even by rich?? What kind of Industry leaders we have?? Why cant they feel their duty to pay tax instead of looking for tax incentives….. This AD has reduced many players to come in with investment……pay tax and then prepare viable business proposition for the renewable energy and put pressure on biomass equipment, wind energy equipment manufacturers to reduce the price otherwise allow foreign companies to come in by withdrawing the Accelerated Depreciation and i will show the business case / opportunity, so that these hidden agenda of AD cant remain forever in life…. in Solar the havoc of AD is less and it should also go and allow small entrepreneurs with a business plan in the policy to come forward without AD for a real growth of economy and make these tax evader to pay taxes.

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