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Wind Power Market in India

A probable change in the incentives given to the Wind Power Sector in India has created waves across the industry.

Whether this will result in a drop in demand of wind farms and investment in the wind power segment needs to be seen. However, if it does result in drop in demand then it is sure to affect the wind turbine manufacturers in India as well as the global suppliers in India. Indian companies may then look to export wind turbines to the US and Europe where clean energy is expanding its footprint rapidly.The installed wind energy capacity in India stands at 14,157 mw as on March 2011. Gross wind power potential in the country has been estimated at over 45,000 mw, according to estimates made by Wind Energy Manufacturers Association.

The wind power industry witnessed a sharp rise in investments of about $3 billion. This is the highest after China and the US. However, a corresponding increase in wind power generation was not seen. This may be attributed to the current subsidy regime. Under the subsidy regime applicable to the wind power sector in India, a company can reap benefit of accelerated depreciation on the amount of investment made for development of wind power. This had made wind power development more as a means of tax shelter than for increasing power generation.

The government is, thus, considering removal of this subsidy and introducing an alternative subsidy which will shift the market focus from investment incentives to production incentive. Incentives based on actual power generation rewards projects on how much clean energy they produce instead of the size of installations.

The finance and renewable energy ministries plan to discontinue the benefit next April, when India is expected to introduce a new tax code.  However, the upcoming Direct Tax Code does not explicitly propose to change current income tax laws that permit accelerated depreciation.

Categories: Data - Power, Power
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