India Announces Incentives for Wind Power Generation

By SUNIL RAGHU
NEW DELHI -- India's ministry of new and renewable energy Thursday announced the implementation of incentives for grid-connected wind power projects providing cleaner power.
Wind electricity producers will now receive a generation-based incentive of 0.50 rupees ($0.01) per unit of electricity fed into the grid. The government will spend about 3.8 billion rupees on subsidies as of the new scheme.
"Providing 0.50 rupees per unit is huge if you compare it with existing wind power generation costs," Debashish Majumdar, chairman and managing director, Indian Renewable Energy Development Agency, told reporters on the sidelines of an industry event. "The average price of wind power in India is currently about 3 rupees per unit."
Installed wind power in India stands at 10,500 megawatts, of the country's total of 15.59 gigawatts.
India's federal government is promoting the renewable sector through a mix of fiscal and financial incentives as it aims to exploit its renewable energy potential by attracting investments in the sector and reduce carbon emissions.
The latest tariff incentive comes three months after the Central Electricity Regulatory Commission, which regulates power tariffs in the country, announced tariff norms for companies investing in renewable energy projects, stating they will get a 19% pretax return on investments for the first 10 years of generation and 23% thereafter.
The tariff on power produced by wind energy will vary between 3.76 rupees and 5.64 rupees per kilowatt hour, depending on the wind velocity at the site, CERC had said.
India's new scheme would be implemented parallel to other existing incentive scheme for wind power in the country that allow producers to seek accelerated depreciation on their investments.
"The new scheme cuts down the uncertainty as it is linked directly to generation. The more you generate the more you get," Mr. Majumdar said.
Write to Sunil Raghu at Sunil.Raghu@dowjones.com