Incentives to wind farms may be extended for 10 years

Currently,the 80 per cent depreciation benefit is available only during the installation of the wind mills in the first year. However,the new move is likely to act as a major catalyst to wind energy as the country plans to double its installed capacity in this segment from the current 10,500 MW as on March 31,2009 to 20,000 MW in the next five years. The plan is to add 2,000 MW every year. The government plans to attract and investment of Rs 40,000 crore in next five years to create this additional capacity.

The government is yet to finalise the GBI amount but it is likely to be between 40-60 paise per unit of electricity. About Rs 3,000 crore are required per year for the GBI scheme at net present value (NPV) covering about 4,500 MW. However,the GBI will kick in the second and third years only as the first year goes towards installation.

The government is sure that the benefit will attract huge private sector investments. Already players like Tata,NTPC,NHPC,ONGC,Reliance Energy,IOL have forayed into this segment. “There are about 3,000 private investors in this sector already and the proposed new benefit is likely to attract more investments from them,” a senior government official told The Indian Express.

With the forum of electricity regulators adopting the renewable purchase standards (RPS) on behalf of all states,private investors are likely to get assures returns for the excess power they generate. Under the RPS states will have to commit to buy a certain per cent of their electricity needs from renewable resources.

The key states that have roped in big players for development of wind farms are Tamil Nadu with an installed capacity of 4,300 MW,Gujarat at 1,560 MW,Maharashtra at 940MW,Karnataka at 1,327 MW and Rajasthan at 738 MW.