With incentives offered for wind energy investments having come down this financial year, installations by small investors — those who have less than 10 MW — is expected to drop drastically.
Of the 32 GW of installed wind energy capacity in the country, 60% are by small investors.
According to K. Kasthurirangaian, chairman of Indian Wind Power Association, the accelerated depreciation has gone down from 80% to 40%, after generation-based incentive and 10-year tax-free benefit for profits from investments in wind energy were withdrawn.
The annual installation was 3,472 MW in 2015-2016 and it peaked to 5,400 MW last financial year. This year, it is expected to be 6,000 MW. Public sector units, power purchasers and bigger companies are investing now in wind energy. For smaller investors, especially those who operate power-intensive industries, renewable energy for captive use still gives price advantages compared with buying power from the grid.
Though these industries will continue to invest in wind energy, the volume will come down. While the cost of the turbines is going up, the prices realised for wind energy generated are declining. In February this year, the lowest price quoted in the competitive bidding was ₹3.46 a unit. The prices might come down further as the States will want to go in for competitive bidding.
‘Incentives needed now’
“At a time when the Government should encourage investments in renewable energy with incentives, these have been removed. There is almost no incentive for the smaller investors. This will have an impact,” Mr. Kasthurirangaian said.
The Central Government should restore accelerated depreciation at 80%, encourage re-powering of turbines that are more than 20 years old, and the State electricity regulatory commissions should determine prices for hybrid generation capacities (wind and solar), he said.
Indian Wind Turbine Manufacturers’ Association chairman Sarvesh Kumar, however, said that there was a market for all players. The major players in the market today are independent power producers and they are not dependent on depreciation benefits. Hence, the withdrawal of benefits will not affect them. For those who go in for renewable energy for captive use, the accelerated depreciation benefits are still there, though they have been reduced.
