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Updated: April 3, 2012 22:59 IST

Wind energy units seek to restore depreciation benefits

M. Soundariya Preetha
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K. Kasthurirangaian
K. Kasthurirangaian

With the Union Government removing the accelerated depreciation benefit for investors in wind mill projects from April 1, 2012, investment in the wind energy sector will not be attractive to the small captive investors, according to K. Kasthoorirangaian, Chairman of Indian Wind Power Association.

Investors had the option to go in for accelerated deprecation or generation-based incentive. According to a recent notification of the Income-tax Department, for wind mills installed from April 1, 2012, depreciation is restricted to 15 per cent plus 20 per cent of the investment in wind mills, as against 80 per cent extended so far. The generation-based incentive scheme has also come to an end, he says.

The total installed wind energy capacity in the country is 16,167 MW and this includes 6,826 MW in Tamil Nadu (as on February 29, 2012). During the last two years, an average of 2,400 MW was added every year. Any investor should shell out 25-30 per cent of total investment from his resources to install a wind mill.

Small captive investors from the micro, small and medium-scale sector are the majority going in for wind mill installations and the accelerated depreciation benefit provided them the margin money for investment.

The Union Ministry of New and Renewable Energy had also recommended continuing the scheme. The recent notification will affect investments in the wind energy sector and the scheme should be continued to attract investments, he said.

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