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Centre to pay producers 50p for every unit of wind power

According to reports, in a move aimed at boosting wind power capacity, the Centre on Tuesday approved a proposal to give producers 50 paise for every unit of power generated.

Five months after finance minister P Chidambaram announced incentives for wind power in his Budget, the Union cabinet has cleared generation-based incentives (GBI) for power producers registered under the scheme across India. Tamil Nadu ranks among the top three states in wind production with an installed capacity of over 7,000 MW. In fact, it has the highest installed capacity for wind power, but pays producers less than the other states (see graphic).

According to a source, the the payment will begin with retrospective effect from April 1, 2012. The scheme is available till the payout reaches 1 crore per megawatt (MW), and the entire payout cannot be availed before a period of four years or after 10 years. The scheme which was in force earlier, was withdrawn on April 1, 2012, leading to a fall in new projects, especially in TN. While new projects, with a capacity of 3,200MW, were added across India in 2011, the capacity addition fell to 1,700MW in 2012, because incentives like GBI were withdrawn.

In his Budget for 2013-14, Chidambaram had announced that GBI would be brought back and had set apart 800 crore for this, leading to a marginal increase in wind power installations over the last few months. The formal announcement regarding the GBI scheme has brought the wind industry in India a lot of cheer and is expected to encourage more people to enter the field.

“This is a good move for the industry as it holds for the entire 12th Plan. Since it comes with retrospective effect, firms that have already set up wind farms will also benefit,” said Vineeth Vijayaraghavan, founder of Panchabuta, a renewable energy-focused newsletter. For TN, however, this may not be enough as several companies have already moved to other states due to policy issues in the state. While the incentives will attract investors, other issues such as lack of sufficient transmission infrastructure, and policy issues like transmission charges for captive investors (companies which generate power and consume it themselves) have to be resolved, companies say.

Meanwhile, the announcement regarding reinstatement of the other incentives that gave a push to the wind industry –– the accelerated depreciation scheme (where companies get to write off 80% of the equipment cost during the first year) — has been deferred. Sources say that a committee has been set up to look into this.

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