Finance Minister P. Chidambaram has restored the generation-based incentive to the wind energy sector and provided Rs 800 crore to the Ministry of New and Renewable Energy. He said the “sector deserved incentives.”
The Government will provide low-interest bearing funds from the National Clean Energy Fund to the Indian Renewable Energy Development Agency to on-lend to renewable energy projects. The scheme will have a life-span of five years, according to Chidambaram.
Ramesh Kymal, Chairman, Indian Wind Turbine Manufacturers Association, said the “reintroduction of generation-based incentive is welcome. It will spur growth in investments in the sector.”
Last year over 3,100 MW of wind power was installed. But in 2012-13, in the absence of the incentive, installations were down by over 50 per cent. These investments can now be recovered over the next two years.
Tax holiday
The industry has also welcomed the extension of the one-year tax holiday under 80IA of the income tax for power projects, Kymal, Chairman and Managing Director, Gamesa Wind Turbines, said.
The low-interest fund from the National Clean Energy Fund “which rightfully belongs to the renewable energy sector” will help enhance the viability of renewable energy projects, he said.
Madhusudan Khemka, CEO, Regen Powertech, said the restoration of generation-based incentive is a ‘huge relief’ that will encourage investments in large-scale wind energy projects. In the absence of the incentive over the last year more than 1,000 MW of such projects have been delayed or put on hold. They will get back on track.
The industry is looking for clarification on details of the incentive, whether it takes effect retrospectively, but overall the move is ‘positive’, he said.
U.B. Reddy, a wind industry veteran, said a number of wind power projects that were yet to tie up funds for want of GBI would now be able to achieve financial closure and go ahead with projects in 2013-14. The scheme should seamlessly continue in the future too and any ambiguity on its continuance beyond the next financial year should be removed.
balaji.ar@thehindu.co.in