India

India

More promises but no action on incentive

INDIA: The Indian government has reiterated its intention to reinstate an incentive for wind energy following lobbying by the wind sector.

The generation-based incentive (GBI) was launched in December 2009 and aimed to shift the payment mechanism from a system based on installations to one based on generation. It paid INR 0.5/KWh ($0.009/kWh) and was applicable to a maximum of 4GW of wind.

Even before the GBI was introduced, wind-farm developers could claim tax benefits known as accelerated depreciation (AD). However, this failed to encourage projects to produce wind power once built so the GBI was introduced to incentivise development of efficient wind farms.

Both the GBI and accelerated depreciation were discontinued in April. The wind industry claims that many projects are unviable without the GBI and so have not met financial close. Only 235MW of new wind capacity was installed in the first quarter of 2012, compared with 395MW in the same period last year last year.

When representatives from the Indian Wind Turbine Manufacturers Association, the Indian Wind Energy Association and the Indian Wind Power Association met with officials from the new and renewable energy ministry in early August, the officials again said the government would reinstate the GBI.

The move has been discussed before but has yet to be formally approved by the cabinet. The industry also wants AD brought back, but the government is resisting this.

Officials also pledged to focus more on wind energy and meet the industry on a more regular basis. In the past, the government has been accused of prioritising solar energy.

235MW - Amount of new wind capacity installed in India in Q1, 160MW less than in the same period last year.

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