The wind energy sector is hoping the Central Government announces the details of the generation-based incentive soon to encourage investments.
The Government has committed to reintroduce the incentive for wind energy generators in the Central budget. But the details of the policy and the effective date are yet to be announced. The incentive is crucial for wind energy growth, according to Ramesh Kymal, Chairman, Indian Wind Turbine Manufacturers Association.
Similarly, the Centre should also ensure the State electricity utilities conform to the renewable purchase obligation – ensuring that they procure a predetermined percentage of electricity from renewable sources, he said.
Consistent, long-term policies are needed for the renewable energy sector to thrive. The sector is key to energy security, pollution mitigation and bringing down dependence on costly fossil fuels.
In 2011-12, over 3,200 MW of wind energy capacity was set up in India. But when the incentive was withdrawn, investments in the sector dropped and just about 1,700 MW was added last year. Unless the details of the policy are announced soon, investments continue to drop this year too, he said.
In April, just about 400 MW of wind mills were commissioned in Rajasthan and Maharashtra. Investors had waited for an announcement of the incentive but now with the wind season around the corner in mid-May they have gone ahead with the commissioning.
The concern for the investors is the date the incentive will take effect. Whether it will be with retrospective effect or from the date of announcement?
The Ministry for New and Renewable Energy is expected to pay out Re 0.50 a unit of electricity fed into grid as incentive with a cap of Rs 1 crore per MW. For 2013-14, the Government has earmarked Rs 800 crore. But with policy yet to be formally announced, the incentive is just on paper, Kymal said.
In Tamil Nadu, where there is over 7,000 MW of wind energy capacity installed, adverse policies have discouraged further investments. Last year about 170 MW of wind generation capacity was added against 1,100 MW in the previous year.
Investing in wind energy in the State has become unviable following the levy of Rs 1.27 a unit as cross subsidy charge on every unit of electricity generated. Previously, it had been about 5 per cent, about 30 paise.