Wind energy capacity addition to dip in financial year 2013

MUMBAI: India will witness its weakest wind energy capacity addition in seven years , due to the double-whammy of high interest rates prevailing in financial year 2012-13, coupled with a rollback of incentives, sector players and experts said.

The country may be able to add only 1,500 MW of new wind energy capacity in the fiscal year 2012-13, missing the target of 2,500 MW set at the beginning of the year. According to data from Central Electricity Authority, India has added about 1,068 MW of new wind energy capacity in FY13, until December.

“In the last few years , the wind energy sector exceeded targets with private investments driving its growth. Last year alone, India added 3,000 MW and we could have continued the momentum. However,

without incentives a lot of projects have become unviable and we may be able to add only 1,500 MW this year,” said Ramesh Kymal, CMD of the Indian subsidiary of Spain’s Gamesa. He is also the chairman of Indian Wind Turbine Manufacturers Association.

India has an ambitious target of acquiring 15% of its power needs, or 80,000 MW, from renewable sources by 2020, with an investment of Rs 1.5 lakh crore. Wind energy was pegged as a key growth driver with the sector targeting 15,000 MW of new capacity in the next five years . India has a total installed renewable energy capacity of 26,000 MW, which comprises mainly wind power of 18,275 MW.

Past few years , the wind energy sector thrived even as other sectors missed targets due to incentives such as generation-based incentives (GBI) and accelerated depreciation (AD). But from April 2012, the government rolled back the GBI, which gave independent power producers a benefit of 50 paise for every unit of power generated. The accelerated depreciation benefit, which allowed project developers to write off 80% of the project value in the first year as depreciation and reduced their tax burden, was also withdrawn. The industry has been seeking restoration of both incentives since April and despite the ministry of new and renewable energy supporting the request, the policy has not been approved by the government.